Wall Street retreats; Japanese markets open higher

The STI started the day at 2779.1 after losing 1.5% on 18 May 2012.

OCBC Investment Research said:

Despite the retreat on Wall Street last Friday night, the positive Nikkei start (+0.7% now) is likely to offer some relief for the local bourse this morning.

The STI, which ended 1.5% lower in the previous session, is hovering just above its long term 3-year uptrend support now.

This could provide some firm support in the near term as the index looks likely to initiate a technical rebound and potentially close the 2789-2822 gap resistance today.

Beyond that, the subsequent resistance can be found at the 2900 key support-turned-resistance. On the downside, the immediate support is pegged 2779 (Friday's intraday low), followed by the next support at 2740 (minor resistance-turned-support).

IG Markets Singapore meanwhile noted:

In Singapore, the STI finds itself starting the day at 2779.1 after losing 1.5% on Friday. The local market has given up almost 8% of the gains it achieved from its stellar first quarter and sadly this may not be the full extent of its losses.

While bargain-hunting and buying on dips is recommended after such a heavy sell-off last week, some traders are anticipating more falls before they re-enter the market.

However, the futures market is pointing to a firmer open for the STI today. Japanese markets have already opened slightly higher this morning.