Singapore Markets Morning Briefing - what you need to know for Fri March 16, 2012

Wall Street continued its bull run while the STI sat above 3,000.

IG Markets Singapore said:

It has been in a few years since the STI sat above 3,000 while the S&P 500 was above1,400 – but that is the enviable position we find ourselves in this morning.

Last night Wall Street continued its bull run as manufacturing in the New York region, underlying inflation and jobless claims numbers all came in better than expected. It helped propel the S&P back above 1,400 – the first time it has breached this level for nearly four years.

While the S&P 500 was up 0.6% last night the Dow Jones Industrial Average was up 0.4% to close at 13,253, its highest finish since December 2007.

These post-GFC highs come in the same week as the STI moved above 3,000 and looking like it might end the week on a high, unless of course China has a trick up its sleeve.

The Chinese government has done its best to rock regional stocks recently. In under a fortnight China has revised its GDP growth downwards, revealed a record high trade deficit and warned that its housing market still hasn’t cooled down enough.

But for now the bulls have plenty of grist for their mill as markets hit cyclical highs from more positive economic data. The USD has also given up a little ground which is good news for commodities.

Meanwhile RBS reported (for 15 March 2012 trading):

Volumes were huge overnight (some said 3rd highest for an overnight on record), and busy during the day but not at the same hectic pace.

Chronologically, we saw central bank selling in 10s, two-way from real money in 10s, macro buying of 10s, foreign real money selling of the belly, US real money buying of 10s, and leveraged buying of 10s.

Also throughout was decent interest in the front end from a variety of accounts, especially once the market stabilized (cash, Euros, 1y1y rate, etc). In TIPS we saw buying of 2yr and 10yr TIPS, selling of 3yr TIPS, and 2 way flow in 30s, skewed to better buying.

Total Treasury broker volume today was 141% of the 10-day average.

OCBC Investment Research, on the other hand, noted (for 15 March 2012 trading):

The further recovery by US indices to another new multi-year high is likely to cue the local bourse to a more optimistic start this morning.

Following Wednesday's strong rally, the STI headed into a consolidation mode yesterday; after opening flat, the index traded in a muted fashion for the rest of the day before closing unchanged.

But with today's tone likely to turn more upside biased, we could see the index testing the 3030 (key peak in Feb '12) immediate resistance again. A bullish break above this level could see it climbing towards the 3055 support-turned-resistance.

On the downside, 3000 psychological level is still the immediate support for now, with the subsequent base pegged at the 2900 key resistance-turned-support.