STI rebounds to a 0.5% gain

Tone is forecast to remain upside biased.

OCBC Investment Research said:

The rebound on Wall Street overnight and the strong Nikkei start (up 1.1% now) are likely to boost local sentiments this morning.

As a recap, the STI continued to hold up well yesterday; despite opening 0.1% lower, the index rebounded to a 0.5% gain by the close.

And with today’s tone likely to remain upside biased, we could see the index testing and potentially overcoming the 3180 support-turned-resistance.

Beyond that, the next hurdle lies at the 3200 psychological resistance. On the downside, 3140 is still the immediate support, with the subsequent base pegged at the 3110 key resistance-turned-support.

IG Markets Singapore meanwhile noted:

After yesterday’s BoJ additional stimulus announcement we saw the yen initially gain back some of the lost ground, as much was already seemingly priced in to the currency. In addition the Nikkei was the rank underperformer in Asia.

However, the buy USDJPY on dips strategy still seems to be paying dividends as we’ve seen the pair trade move from below 84 back towards 84.50 overnight.

Unsurprisingly in response the Nikkei has opened as one of the stronger markets this morning, gaining back a large piece of yesterday’s fall as we stand around 1% higher, with equities continuing to prosper as the currency weakens.

Gold continues its year end spin, falling as low $1635 in overnight trade, before recover to currently stand closer to the $1650 level.

QE expectations falling on the back of the rosier US numbers have dented the precious metal’s outlook. With technical analysts spotting bearish signals on the charts and less funds now expected in the system from QE we could see further pressure as we enter the New Year.

Oil responded positively to the US numbers as front month WTI pushed up above $90.

As we look ahead to the last day of trading before we enter Christmas week, we are once again knocking on the door of fresh 2012 highs for our benchmark, as we call the STI to open 0.5% firmer.