Daily Markets Briefing: STI down 1.1%

New foreign worker curbs remain a threat.

IG Markets Singapore said:

The STI suffered a 1.1% drop as traders analysed the new foreign worker curbs in the budget which will tighten the labour market further and threaten to strangle company profits.

We are pricing a 0.2% lift for the STI on the open, as we follow the strong performance from US shares and ignore the distractions in Europe.

Meanwhile, OCBC Investment Research noted:

The local bourse is likely to get some cheer from the rebound on Wall Street overnight, especially after the STI’s 1% slide yesterday.

As mentioned earlier, the recent failure to convincingly clear the key 3300 hurdle has sent the index tumbling back to the initial 3258 support (38.2% retracement of 3160-3319 rally).

However, there is still a risk that the index could stage a deeper correction to 3171 (38.2% retracement of 2931-3319 rally); this as we head into a post-earnings lull in Mar.

Before 3300, the index could face a modest speed bump at 3282 (centre of Bollinger Band).