Importantly, so long as yields on assets remain at current levels, policy rates do not rise, and funding costs remain at current levels, banks should continue to reap benefits, especially if credit costs stay benign. Since banks are the most important component stocks, the STI should also remain resilient, despite the negative impact on S-REITs and developers.
Since short and medium term indicators have filliped, the directional indicators are neutral, and ADX is falling, the downside is likely to be limited and a rebound should ensue. However resistance stays at the thrice-tested 3,250 as a firmer phase for the banks is likely to be offset by a weaker phase for developers and S-REITs.
Elsewhere, 10-year US treasury yields have moved up to 4.64% a at April 19, an indication that policy rates may stay higher for longer. The higher risk-free rates will cause US equities to remain under some pressure in the near term.
