STI sees gains of 1.8% following positive news from Europe

Thursday's tone is expected to remain upbeat, with the index forecast to recover further.

OCBC Investment Research said:

The more than 2% surge on Wall Street overnight and the positive Nikkei start (+1% now) are likely to boost local sentiments further this morning.

As a recap, the STI had already had a strong run yesterday; following a 0.5% gain at the open, the index surged to a 1.8% higher close as positive news from Europe filtered down to the local market in the afternoon.

And with today's tone likely to remain upbeat, we could see the index recovering further towards the 2800 psychological resistance, with the subsequent obstacle marked at the 2830 minor peak.

On the downside, 2700 (recent trough) is now the immediate support, with the subsequent base lying at the 2650 support (next minor trough).

IG Markets Singapore meanwhile noted:

On European bourses, the FTSE came back from its royal love-in holiday to see the FTSE 100 rise 2.4% while Germany’s DAX ended 2.1% higher. The Bank of England is meeting today and trading floors are speculating about another round of monetary easing for the UK economy.

Asian markets look set to ride on this wave of quantitative easing euphoria today. If only the Fed could flood the market with billions of cheap dollars every day we could forget about the persistent problems in the eurozone and the lack of consistent growth among the world’s major economies.

Some cynical traders put yesterday’s rally down to short covering as no real change in stance had been announced from any central bank as yet.

Equities weren’t the only party-goers last night as commodities saw some solid gains also.

Oil rallied last night on thoughts of fresh stimulus as US Crude rose to $85.02 a barrel. Brent Crude is back above the $100 level, although only slightly, as many traders feel the sharp sell-off in recent week was overdone.