STI loses 0.4%

Tone is not expected to see any significant improvement following the mixed reactions on Wall Street and the muted Nikkei start.

OCBC Investment Research said:

The mixed reactions on Wall Street overnight and the muted Nikkei start (up 0.2% now) are unlikely to provide much inspiration to the local bourse this morning.

After a failed retest at the 3090 key resistance a few sessions back, the STI has continued to slipped gradually; after a 0.1% lower opening yesterday, the index drifted lower to a 0.4% loss by the close.

With today's tone unlikely to see any significant improvement, we could see the index consolidating around current levels with the immediate support marked at the 3040 resistance-turned-support.

Below that, the subsequent base lies at the 3005 minor troughs. 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:

Although Wall Street ended relatively flat last night it hid a recovery after equities fell hard from weak global economic data.

China set the ball rolling with a flash PMI survey showing the manufacturing sector shrank for the 11th consecutive month. Japan added to Asian woes with a near 6% drop in exports.

This negative sentiment crossed over to Europe and the US who produced their own weak economic data which sent risk assets lower. But markets took on a more bullish tone, helped by rumours that Spain was working behind the scenes with the EU on a rescue package.

The S&P 500 cut its losses to finish flat while the Dow Jones Industrial Average edged up 0.1%. This came despite jobless claims coming in worse than expected.

In Europe, the FTSE 100 lost 0.6% while the DAX ended flat. While equities looked pretty lacklustre, there was a strong undertone that over the long term central bank intervention would bolster markets and put the world economy back on track.