STI set for weaker open amidst market skepticism

OCBC Investment Research says sentiment is likely to turn more downside biased.

Here’s more from OCBC Investment Research:

The mixed reactions on Wall Street overnight and the negative Nikkei start (down 0.5% now) are likely to direct the local bourse to a weaker opening this morning.

Despite opening some 1.4% yesterday morning, the STI lost much of its earlier gains to close just 0.5% in the black; this suggesting that investors are generally still feeling skeptical about the recent market optimism.

And with today's sentiment likely to turn more downside biased, we could potentially see the index heading lower towards the 2800 psychological support for a test.

Below that, the next base is marked at the 2735 minor trough. On the upside, 2850 (yesterday's intraday high) is now the immediate obstacle to overcome, with the subsequent hurdle pegged at the 2900 key support-turned-resistance.

IG Markets Singapore meanwhile noted:

The risk rally bubble burst in Europe for the second successive Monday, despite all the positives that could be sought from the right election result for investors out of Greece, in what was a close battle. The next European problem child started kicking and screaming, attracting almost unwanted attention, as Spain saw 10-year bond yields move back above 7% and set a euro-era record high for its debt.

These latest moves once again underline the complexity of the issues facing politicians and central bankers. There is no respite between one problem seemingly being dealt with and the next emerging. Sadly, the brutal truth is despite Spain taking its turn in the unwanted limelight of this debt saga, Greek issues are in no way fully dealt with yet.

By the time Singapore markets closed yesterday, we had already seen European markets give up all early gains and US futures slip in to negative territory. Looking for a guide to our open is tricky, as US benchmarks finished mixed, with DJIA closing 0.2% lower and the broader S&P500 marginally up on the day by 0.1%. The Nasdaq Composite was the stand-out performer advancing 0.8%, as tech stocks outperformed the wider market. Given this mixed leads, it is unsurprising we are looking at a relatively flat open in Singapore today.