STI heads into correction mode

The index rebounded at the 3055 level to close with just a 0.3% loss.

OCBC Investment Research said:

The mild retreat on Wall Street overnight and the weak Nikkei start (down 0.2% now) are likely to spook the local bourse to further losses this morning.

As a recap, the STI headed into a correction mode yesterday following the gains last Friday; despite losing as much as 0.8% at one stage, the index later rebounded at the 3055 level to register just a 0.3% loss by the close.

With today's tone likely remain more downside biased, we could see the index sliding to the 3055 immediate support again. Should this level fail to hold this time round, we could see it retreating further towards the 3040 key resistance-turned-support.

On the upside, the immediate obstacle is still pegged at the 3090 key peaks, with the subsequent obstacle pegged at the 3160 support-turned-resistance.

IG Markets Singapore meanwhile noted:

In Asia, markets are expecting more hot money to flow into the region now the big central banks have pushed their liquidity buttons at the same time. However, the region is competing with Latin America which may emerge as the hotspot within emerging markets.

Institutions like Latin America’s commodity exposure and the fact that valuations have been more subdued than Asia, allowing the opportunity for more bargain hunting.

In Singapore today, the futures market points to a slightly weaker open for the STI this morning.