Singapore Markets Morning Briefing - what you need to know for Fri April 27, 2012

Firmer opening is expected for the STI, although gains are likely to be limited.

OCBC Investment research said:

The further recovery on Wall Street overnight and positive Nikkei start (up 0.2% now) are likely to cue the local bourse to a higher opening this morning.

However, any gains are likely to be limited as the STI has not shown any signs of breaking out from its tight trading range yet; the index was pretty lacklustre yesterday, closing nearly flat.

For now, 3010 (recent peak) is still the immediate resistance to overcome as the subsequent key obstacle lies at 3030 (various key peaks).

On the downside, the immediate support remains at 2946 (recent trough), followed by the vital base at the 2900 key resistance-turned-support.

IG Markets Singapore meanwhile noted:

Wall Street and Europe put on solid gains last night as better-than-expected housing data, strong corporate earnings and clinging hopes of Fed monetary easing buoyed the markets.

The S&P 500 and the NASDAQ both gained 0.7% while the Dow Jones Industrial Average was up 0.9%.
US corporate earnings have on the whole come in above expectations for quarter one with Starbucks and Amazon the latest names to delight investors.

Yet jobless claims have risen sparking fears of a slowdown in the labour market while consumer confidence took a dive. This continues the mixed signals the US economy is throwing up as investors seek guidance on how resilient its economic recovery is.

European markets also performed well last night but were capped by news that Spain is to be downgraded to BBB by ratings agency Standard & Poor’s.

However, few were genuinely surprised given the state of Spain’s budget deficit, economy and unemployment.

What is more worrying is the health of European banks which have been taking ECB cheap borrowing hand-outs during this eurozone crisis but don’t seem to be in any better shape.

Markets have been pretty volatile this week and last night’s mixed messages hold few clues to how Asia will end the week.