STI set for further recovery

Thanks to improved sentiments.

OCBC Investment Research said:

The more than 1% rally on Wall Street last Friday night is likely to provide significant inspiration to the local bourse this morning.

With the STI still maintaining its upward trajectory with a 0.3% gain in the last session, we could see it extending its recovery today with the improved sentiments.

For now, we still see the 3300 psychological level as the immediate hurdle; the next resistance is still pegged at the 3315 key peak.

On the downside, 3280 is the immediate resistance-turned-support, ahead of the 3230 key resistance-turned-support.

IG Markets Singapore meanwhile noted:

The STI moved within touching distance of 3300 on Friday and could enjoy a strong start to the week thanks to improving global macroeconomic data.

Asian markets were busy assessing China’s official PMI data on Friday which continued to show it was on a slow and steady road to recovery, even if the 50.4 print was slightly lower than December’s.

But after regional markets closed the news out of other major economies got better. The US awaited non-farm payrolls data with eager anticipation after last week’s shock contraction in its GDP. The 157,000 figure for January was slightly lower than the 160,000 consensus but showed job creation remained robust, without being spectacular.

But what did excite US bulls was a upward revision in November and December figures. The highlight was November’s revised jobs data coming in at 247,000. The revision of previous months' data is often looked at by investors for the real guide to the health of the economy, with significant revisions upwards cheered, and concerns raised when numbers are lowered.

This was enough to push Wall Street to fresh multi-year highs, a trend likely to continue as bulls lift equities higher and higher. The S&P 500 gained 1% to hit a new five-year high while the Dow Jones Industrial Average put on 1.1% to break through the 14,000 barrier.