STI rebounds to close almost 1.3% higher

The index gained due to Wall Street’s strong session, growing talk of fresh stimulus for the Chinese economy, and some early window-dressing, says IG Markets Singapore.

OCBC Investment Research said:

The continued recovery on Wall Street overnight and the strong Nikkei start (up 1.2% now) are likely to inspire the local bourse to further gains this morning.

As a recap, the STI had already showed some positive signs yesterday; it rebounded again at the 2800 psychological support to close nearly 1.3% higher.

And with today's tone likely to remain optimistic, we could see the index testing the 2862 immediate resistance; this as the subsequent vital obstacle lies at the 2900 key support-turned-resistance.

On the downside, the immediate base is still pegged at the 2800 psychological support, with the next support marked at the 2760 minor trough.

IG Markets Singapore meanwhile noted:

The US housing markets is proving to be an unlikely saviour for eurozone-jaded traders this week with more positive data.

Last night firmer US economic data lifted Wall Street and Europe with orders for durable goods and American home-buying figures coming in better-than-expected.

The Dow Jones Industrial Average rose 0.7%, the NASDAQ lifted 0.6% while the S&P 500 gained 0.9%. This has helped take investors’ minds off the expected disappointment of the EU summit which starts today.

European markets were also in a positive mood with the FTSE 100 gaining 1.4% while the DAX put on 1.5%. This has helped paper over the cracks in the eurozone for another session as Spanish debt worries took a back seat.

Yesterday Case-Shiller data showed a rise in US house prices for the third consecutive month which helped boost markets globally. Today they may again be lifted by more positive economic data from the world’s biggest economy.

The STI gained an impressive 1.3% yesterday through a combination of Wall Street’s strong session, growing talk of fresh stimulus for the Chinese economy and some early window-dressing as Q2 comes to a close.

Traders will be looking for more clues from China as to the “more proactive” policies it may be introducing to ensure growth. This spending spree is becoming more anticipated than the Fed’s third round of quantitative easing, which has so far failed to materialise.