The benchmark index has pared all of its earlier gains (3207 intraday high) and a lower close is on the cards as caution remains amid lingering worries over the impact of Chinese monetary tightening, and ahead of the FOMC meeting tomorrow in the U.S., analysts say.
Asian stocks slipped because of concerns that rising inflation may invite aggressive policy action and hurt growth in the world’s engines like China and India. U.S. shares also fell overnight on lackluster tech and materials earnings.
Volume shrinks slightly too, with 1.10 billion shares traded vs 1.50 billion at this point yesterday. “The main talk is that there’s really very little fresh incentive to buy,” says an analyst at a local brokerage. He says players will be watching the U.S. for cues, as well as China, where tackling inflation is now the key concern.
Singapore shares manage to cling to their modest gains, supported by an advance across Asian markets, but activity is minimal with only 415.6 million shares worth $413.6 million traded.
Gainers outnumber decliners by more than 2 to 1.
STI off 0.2% at 3175.17 vs down 0.5% at 3164.40 in opening minutes. Support expected at 3150, resistance at last week’s 3216 peak. “If (the pullback) goes on for another two to three weeks, we could be staring at a head and shoulders top, which is traditionally bearish,” says Phillip Securities.
Gainers outnumber decliners by about 2.5 to 1. STI +0.8% at 3162.19, not expected to test Tuesday’s 3187 intraday high for rest of session.
STI off 0.1% at 3192.69 midday vs 3183.04 morning low, expected to end above current 3150 November trough.
STI +0.1% at 3302.29 vs 3313.34 intraday high, 3289.04 low, likely to end below 3320.
At 0341 GMT, Genting Singapore shares were trading at $2.26 on a volume of 73.5 million shares.
“The market is still very much news driven, we had a rally on the Dow last night which started us off this morning, and the China data gave an excuse to take profits,” says dealer at local brokerage.
“There are several reasons why even if a sharp U.S. slowdown materializes, the current ‘buy-on-weakness’ stance might be maintained,” says Phillip Securities analyst Phua Ming-Weii.
