STI posts 0.3% loss following strong rebound

Investors are starting to become very jaded, says IG Markets Singapore.

OCBC Investment Research said:

Although US stocks climbed moderately higher overnight, the local bourse is unlikely to see a positive start this morning; the Nikkei 225 index is holding on to a 0.2% loss now.

Despite a relatively strong rebound at the 2800 psychological support two sessions ago, the STI slipped gradually thereafter to register a 0.3% loss yesterday.

And with today's tone likely to remain a tad more downside biased, we could see the STI inching lower towards the 2800 level again. Beyond that, we still see the subsequent support at the 2760 minor trough.

On the upside, the immediate resistance is still pegged at the 2862 minor peak, as the next vital obstacle lies at the 2900 key support-turned-resistance.

IG Markets Singapore meanwhile noted:

Markets are looking muddled at the moment. Investors are starting to become very jaded not just with the deepening eurozone crisis but with policymakers’ ability to tackle the crisis.

For the first time, markets are not rising in anticipation of a crunch EU summit which starts tomorrow. Instead, they have been heading south as hopes fade of a near-term solution.

Previously, global equities would rally ahead of such a meeting with high hopes that Merkel and her European chums would solve the crisis with the flick of a switch.

Instead, this week traders are remaining very cautious with low expectations of any meaningful debate or a concrete action plan to pull the 17 members clear of the current dangers and back into growth mode.

While markets are muddled, confusing and lacklustre investors are at least agreeing on one thing – the upcoming EU summit starting tomorrow is unlikely to provide a painkiller to ease the throbbing migraine that is the eurozone.

European markets were very muted last night while Wall Street put on some mild gains with slightly more positive direction. They were helped by Case-Shiller data showing US house prices rose for the third consecutive month in April.

The S&P 500 put on 0.5%, the Dow Jones Industrial Average edged up 0.3% while the NASDAQ rose 0.6%.