STI rebounds but up for weak open

The STI closed with a 0.5% gain but is expected to be affected by the Nikkei’s poor start and the closed US market.

OCBC Investment Research said:

With US market closed for holiday overnight and the Nikkei having a poor start (-0.6% now), these are likely to dent local sentiments this morning.

As a recap, the STI rebounded from the 2763 support to a 0.5% gain at the close yesterday. However, this could be technical in nature as the recovery was on the back of very thin volume.

With today's tone likely to turn more downside biased, we could see the index slipping back towards the 2763 immediate support (recent trough) again, with the subsequent base marked at the 2730 minor resistance-turned-support.

On the upside, the immediate resistance is still pegged at the 2799-2812 gap resistance formed recently, followed by the next obstacle at the 2831 minor peak.

IG Markets Singapore meanwhile noted:

Markets regained some poise yesterday but there's no hiding the fact that the eurozone crisis hasn’t gone away.

While Asian markets saw some healthy gains the mood is still very much bearish mixed in with occasional bullishness when traders feel markets have been oversold or a sliver of good news ekes out of the eurozone.

Yesterday, we had the slightly more positive news that Greece’s pro-bailout parties are gaining traction. This saw markets unexpectedly rise in Asia while European markets failed to get excited. US markets were closed last night.

But next month’s elections are still a wildcard and it’s anyone’s guess what a coalition government will look like.

But the markets were calmed yesterday by the rising hopes that Greece may actually stay in the eurozone after all, despite its fate having already been decided two weeks ago. If Greece does avoid a Grexit, economists may soon be referring to its decision to stay as a Greversal (Greek reversal).