STI to look for stability

The index, after losing as much as 0.6%, rebounded to a 0.1% loss on Friday.

OCBC Investment Research said:

The modest gains on Wall Street overnight and the weak Nikkei start (down 0.6% now) are unlikely to provide much inspiration to the local bourse this morning, especially ahead of a public holiday tomorrow.

As a recap, the STI continued to slip last Friday; but despite losing as much as 0.6% intraday, it rebounded to just a 0.1% loss by the close.

With today’s tone likely to be fairly muted, we could see the index consolidate around current levels with the immediate base marked at the 2980 key troughs.

Below that, the subsequent base lies at the 2930 key trough. On the upside, 3020 is the immediate support-turned-resistance, with the next obstacle marked at the 3065 support-turned-resistance.

IG Markets Singapore meanwhile noted:

The local stock market will be looking for some stability this week after last week’s battering as traders feared the US economy could fall off a cliff.

While markets don’t need a replacement for the eurozone crisis as their single biggest worry, the fiscal cliff is in danger of becoming the new number one concern.

The effects of $600 billion being withdrawn from the world’s biggest economy are far-reaching, although $40 billion a month in QE3 injections may soften the blow.

The STI had a torrid week in line with global markets and returns for the year slipped below 14% as the index tested the 3000 threshold.

This week traders have some upbeat economic data to occupy themselves with amid the doom and gloom of the US potentially slipping into recession if a political resolution can’t be reached on impending tax hikes and spending cuts.