STI set for flat open

Tone for 3 October 2012 is forecast to remain fairly muted.

OCBC Investment Research said:

The mixed reactions on Wall Street overnight and the flat Nikkei start are likely to keep the local bourse in a consolidative mode this morning.

As a recap, the STI saw a surprised rebound yesterday against the trend of other global markets; following a 0.1% higher opening, the index recovered to a 0.7% gain by the close.

But with today's tone likely to remain fairly muted, we could continue to see the STI swinging between the 3040 resistance-turned-support and the 3088 recent high.

Meanwhile, the subsequent base still lies at the 3000 psychological support, with the next hurdle still pegged at the 3100 psychological resistance.

IG Markets Singapore meanwhile noted:

Is Singapore’s economy in its darkest hour before the dawn? With factory output showing a third straight month there is a strong chance the local economy slipped into recession in Q3.

Q3 official figures will be released next week and if last night’s PMI print for September is anything to go by, the signs don’t look good for staving off a technical recession. Manufacturing output came in at 48.7, another contraction on August’s already weak read of 49.1.

The electronics sector looked to be more resilient at the start of the year giving off a veneer that it could weather a downturn in foreign demand, but is now starting to soften along with Asian peers like Korea and Taiwan.

Only the pharmaceutical sector, which isn’t included in PMI data, can save the day.

In the aftermath of another month of shrinkage in global manufacturing, with the notable exception of the US, there is the glimmer of hope that the worst is now behind us as economic growth and factory output bottom out.

Right now this kind of glass-half-full sentiment looks wildly misplaced with so much doom and gloom on the horizon with a eurozone crisis still posing a major risk and the impending fiscal cliff in the US, plus a Chinese slowdown yet to be truly assessed.