STI set for firmer open

The index had a significant recovery on 7 December.

OCBC Investment Research said:

The mixed reactions on Wall Street last Friday night are unlikely to offer much inspiration to the local bourse this morning.

As a recap, the STI saw a significant recovery last Friday; after a 0.4% higher opening, the index overcame its 2-year downtrend resistance to register a 0.9% gain by the close.

But with the index now hovering just below its 3110 key resistance, we could potentially see a near-term pullback to the 3090 immediate support.

Beyond the 3110 obstacle, the next hurdle lies at the 3140 gap resistance. On the downside, the subsequent support is pegged at the 3050 recent trough.

IG Markets Singapore meanwhile noted:

In Singapore this week, the attention could shift to the other big corporate story of the year (F&N) as one hopes the Olam debacle quietens down this week. But it may be too soon to count your chickens, or nuts, or processing plants given Olam’s track record.

Thai tycoon Charoen has a December 11 deadline tomorrow when many hope he will improve his stale $8.88 a share offering to something more reflective of F&N’s true value. To stick to his guns will play into the hands of OUE’s $9.08 offer, a scenario Charoen is unlikely to let happen. An expectation of a higher offer has seen the share price inch up into the $9.50 range.

The futures markets points to the STI starting the week on a firmer note, as we price in close to a 1% gain for this morning’s open.