STI easing towards 3000 level

On 9 October 2012, the index closed below the uptrend line since early June.

OCBC Investment Research said:

The poor showing on Wall Street overnight and the sharply lower Nikkei opening (down 1.8% now) are likely to weigh further on local sentiment in the near term.

While the STI has already corrected over the past two sessions, we could see it continuing to ease towards the key 3000 level, with 3040 providing just a minor support.

Potentially, it could retreat back to 2953 (38.2% retracement of 2698-3110 rally) as yesterday the index closed below the uptrend line since early Jun.

Initial cap likely at 3088 (recent peaks), ahead of 3100 psychological hurdle.

IG Markets Singapore meanwhile noted:

Risk assets were under pressure overnight as European concerns and lower global growth rates weighed heavy on investor sentiment.

As we enter reporting season there is a real sense of pessimism around the market with the feeling that earnings will disappoint. The theory is that poor economic data from lower GDP forecasts and poor PMI data over the last few months will filter through in to corporate earnings. In doing so many companies will miss expectations.

Add in to the mix the on-going euro saga, with Spain still yet to ask for help from the ECB and Greece uncertain about receiving its next tranche of required aid.

The major US benchmarks fell between 0.8% and 1.5%, with the tech-heavy NASDAQ the worst performer.