STI fails to 'hold on to the optimism'

The index had fallen to just a 0.4% gain from a 0.6% higher opening on Thursday.

OCBC Investment Research said:

The continued recovery on Wall Street overnight could provide further inspiration for the local bourse this morning although the gains could be limited by the negative Nikkei start (down 0.2% now).

As a recap, the STI punched through the 3033 key level with a 0.6% higher opening yesterday but failed to hold on to the optimism subsequently. By the close, the index had fallen below this key level to just a 0.4% gain.

But with today's tone likely to remain more upbeat, we could see the index initiating another attempt to clear this obstacle. Above that, we see the next hurdle at the 3070 support-turned-resistance.

On the downside, we still see the immediate base at the 3000 psychological support, followed by the subsequent support at the 2930 minor trough.

IG Markets Singapore meanwhile noted:

In Asia we saw stock markets bounce with expectations of Chinese intervention to support its slowing economy. While nothing has been announced as yet there is no smoke without fire.

Traders in the region will be hoping the PBOC lights the match soon in case the Chinese economy fails to bottom out.

SGX has already been in the headlines this week after raising the bar for companies wanting to list on the local exchange. This will put up a red flag for those small Chinese companies looking for an easy route to a regional listing.

Sadly they will now need to show they are profitable with a proven track record.

On the commodity markets, US crude shot up 3.1% to $92.66 a barrel while Brent crude crept up to $108.86. Tensions have increased in the Middle East with the killing of Israeli tourists in Bulgaria sparking fears of more violence to come.

Corn and soya bean prices have been creeping up over the past five weeks and now have hit levels not seen since 2007/08 when food riots were sparked. The worst US droughts for more than 50 years are to blame.

On the local front, the STI has been putting on some solid gains during the second half of the year after a fairly bleak Q2. However, the futures market is pointing to a fairly flat open this morning.