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STI shows signs of 'breaking down'
Analyst says chances of bouncing back could be challenged by the poor show from US equities.
OCBC Investment Research said:
The more than 1% plunge on Wall Street overnight is likely to spook the local bourse to a further retreat this morning although losses could be moderated by the positive Nikkei start (up 0.4% now).
As a recap, the STI had already shown signs of breaking down yesterday after closing nearly 1% lower at its intraday low and below the 2980 key support.
And with today’s tone likely to deteriorate further, we could see the index slipping further towards the 2930 key trough.
Below that, the subsequent base lies at the 2900 psychological support. On the upside, 2980 is the immediate support-turned-resistance, with the next obstacle marked at the 3020 support-turned-resistance.
IG Markets Singapore meanwhile noted:
Yesterday the STI dropped 1% plunging it below the 3000 threshold. Any chances of bouncing back could be challenged today by last night’s poor show from US equities. The futures market points to a weak open for the local market this morning. We see a floor for the STI at around 2960.
The positive news is that commodity player Olam posted a 26% rise in profits during Q3 bucking the recent trend of poor corporate earnings coming from Singapore blue chips.
And today’s the day for OUE to launch its counter bid for Fraser & Neave after setting a 15 November deadline. The Thais are banking on OUE failing to launch a rival bid, as they themselves have not improved their $8.88 current offer.
Should OUE fail to come up with a deal, through lack of funding or big-name partners, it will leave egg on their faces and some panic among F&N shareholders that the share price might slide back towards $8.88.
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