Singapore Markets Morning Briefing - what you need to know for Fri Feb 3, 2012

Expect neutral opening today following mixed results on Wall Street and a not-so-good Nikkei start.

OCBC Investment Research said:

With US stocks closing mixed overnight and the Nikkei having a mildly negative start (-0.2% now), these are likely to cue the local bourse to a fairly neutral opening as well this morning.

As a recap, the STI attempted another bullish break at the 2916 key resistance yesterday but fell short of that goal by the close. Despite gapping up 0.5% at the open, the index slipped and ended the day 0.1% in the red instead.

And with today's outlook likely to remain more consolidative in nature, we could see the index continue to swing fairly narrowly between the 2916 key resistance and the minor support around 2874 (recent minor trough).

Above the 2916 key obstacle, we still see the subsequent resistance at the 3000 psychological level. On the downside, the 2852-2860 gap support is now the secondary base.

RBS meanwhile noted:

A quiet day with little movement in US equities contributed to a quiet session among the G10 currencies as price action was relatively subdued ahead of the US labour data release. The USD made modest gains but for the most part the G10 USD pairs were rangebound for most of the session.

EUR/USD dropped early in the New York session as the unresolved issue of Greek private sector involvement persisted but the pair recovered later to remain relatively unchanged around 1.3140. USD/JPY moved slightly higher while GBP/USD edged lower to the 1.58 area.

GFT, on the other hand, reported:

There have been no new developments out of Europe over the past 24 hours and for this reason, the euro continued to consolidate against the U.S. dollar. The only piece of economic data out of the Eurozone was producer prices which fell 0.2 percent in the month of December.

Inflationary pressures have been falling across the globe and so it is not a surprise to see producer prices in Europe ease. Central banks around the world, the ECB included believe that prices will hold steady and possibly decline further this year as demand continues to slow.

Discussions between Greece and the IIF are moving forward and according to the IIF, who represents private bond holders, a deal is imminent. Portugal’s 10 year bond yields have declined further to 13.75 percent but Greek bonds yields have moved up by 22bp. France and Spain’s latest bond auctions went off without a hitch, keeping the EUR/USD well supported.