Singapore market (08 Nov 12)

Singapore market: likely to open down, dragged by negative macro developments overnight. US stocks sold off last night, as the Dow fell by 2.4%, the most this year. Fitch has warned that the US may be downgraded next year, unless lawmakers avoid the so-called fiscal cliff and raise the debt ceiling in a timely manner. Meanwhile, inflation concerns have also returned in China, as swap traders scrapped bets that Li Keqiang will ease monetary policy after he is flagged as China’s next premier at a Communist Party congress starting tmrw. The cost to lock in the 3-mth SHIBOR for a year rose 25 bps in the past mth to 3.76%, 4 bps above the benchmark floating rate after trading below it for 18 mths. In the region, the Nikkei is down 1.1% at 8.04am. The Korea market starts 1 hr later today, due to the college entrance exams. Technically, the STI is hovering close to the 3027 support. A close below this level could see the index test the next support at 2977 (6 Sep ‘12 low). This compares with the 200day MA at 2970. The RSI and Stochastic indicators continue to be flattish and below neutral, suggesting a slightly negative near term bias.