'STI starts the week with a lack of direction'

IG Markets Singapore says the country may have fallen into technical recession.

OCBC Investment Research said:

The mixed reactions on Wall Street overnight are unlikely to provide any inspiration to the local bourse this morning; the Japanese market is closed for holiday today.

As a recap, the STI had a significant upside breakthrough in the last session; the index overcame the 3088 key resistance decisively with a 0.7% higher close.

But with today's tone likely to turn a tad more muted, we could potentially see the STI consolidating around current levels with the immediate obstacle marked at the 3135 level (lower limit of gap).

Beyond that, the next hurdle is now pegged at the 3175 level (upper limit of gap zone). On the downside, the immediate base now lies at the 3088 newly established resistance-turned-support, followed by the 3040 resistance-turned-support.

IG Markets Singapore meanwhile noted:

Singapore may have fallen into technical recession when Q3 advance estimates are released on Friday while property stocks may see some weakness from the MAS announcement to tighten lending rules.

Loans will be capped at 35 years while mortgages over 30 years will face require larger deposits.

The STI starts the week with a lack of direction, as we are pricing a relatively flat open.