STI up 1.2%; total gains almost 5.1% since 27 June
Renewed strength on Wall Street and the firmer Nikkei showing could continue to keep the local sentiment buoyant, says OCBC Investment Research.
OCBC Investment Research said:
Renewed strength on Wall Street and the firmer Nikkei showing (now +0.6%) could continue to keep the local sentiment buoyant; but further strong gains look unlikely as US markets are shut for holiday tonight.
As a recap, the STI jumped another 1.2% yesterday, bringing the total gains to nearly 5.1% since 27 Jun; index added 9.2% since 4 Jun.
Although the daily MACD remains positive, we note that the stochastic indicator is not only showing the market as heavily overbought but also converging for a possible negative crossover.
As such, after filling the 2950-2987 gap, we may see profit-taking emerging if the index fails to make further headway against the key 3000 hurdle.
On the downside, the immediate support remains at 2905, then the next support around 2850.
IG Markets Singapore meanwhile noted:
In Singapore, the economy continues to reveal signs of its resilience with manufacturing PMI data showing expansion for June, coming in at the same level as May. This is in stark contrast to the world’s biggest economies which are all suffering sharp contraction as the eurozone crisis hammers factory activity.
Meanwhile employment in Singapore has fallen for a 12th straight month.
But a kick in the teeth for the local economy has been delivered by Manchester United’s owners, the Glazer family, who have picked New York for its stock market listing.
Singapore was in the line-up for a $1 billion IPO this year but this was put on hold due to volatile markets. The Red Devils have now announced they will list on the NYSE in a $100 million float.
The share sale is on a much smaller scale than its planned Singapore listing which may be down to the Glazer’s wariness at how well received a soccer club IPO will be on a nation that prefers to throw or bounce its balls.
On the plus side, at least Manchester United didn’t pick Hong Kong over Singapore.
The futures market hints at a firm opening for the STI this morning, picking up the scent of an upbeat US session. Japanese stocks have already opened higher.