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STI forecast to pull back
General focus remains on the fiscal cliff in the US.
OCBC Investment Research said:
The retreat on Wall Street last Friday night could cue the local bourse to a negative opening this morning.
As a recap, the STI continued its upside momentum in the last session to close nearly 0.4% higher.
But with today’s tone likely to turn more downside-biased, we could see the index pulling back in the direction of the 3140 immediate resistance-turned-support.
Below that, the next base lies at the 3110 key resistance-turned-support. On the upside, the immediate hurdle is still pegged at the 3180 support-turned-resistance, followed by the 3200 psychological obstacle.
IG Markets Singapore meanwhile noted:
General focus remains on the fiscal cliff in the US as we slowly creep towards a compromise agreement between Republicans and Democrats.
It emerged over the weekend that for the first time in the discussions Republicans had conceded to a higher tax rate for households with earnings over $1milion, if the President would agree to cap the costs of certain federal programs.
We are not quite at the eleventh hour in these negotiations and a path to the needed compromise agreement is starting to clearly form.
As we truly enter holiday mode this week market volumes can fall and, occasionally, price moves can be more erratic. If we do have any nasty surprises before an agreement can be reached then we could well get a spike in volatility before Christmas.
In Singapore we look set to start the week on a firmer note as we currently price a 0.4% for the blue chip index this morning.
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