Singapore Markets Morning Briefing - what you need to know for Fri March 23, 2012

The S&P 500 shed 0.7% while the Dow Jones Industrial Average lost 0.6%.

IG Markets Singapore said:

Poor Chinese and European manufacturing data weighed heavily on the markets last night as this year’s strong rally seems to be running out of steam.

On Wall Street the S&P 500 slipped below the psychological 1,400 mark last night as it shed 0.7% while the Dow Jones Industrial Average lost 0.6%. Europe fared worse with the FTSE 100 falling 0.8% and Germany’s DAX giving up 1.3%.

HSBC’s China PMI number came in at 48.1, well below the previous month’s 49.6 reading, and put pressure on Asian stocks. It was then the eurozone’s turn to print its weak manufacturing numbers which had the same effect across Europe, spilling over into the US.

The growth concerns surrounding China and Europe overshadowed the stronger-than-expected unemployment claims number in the US, which would have otherwise given the markets a lift. 

RBS meanwhile noted (for 22 March 2012 trading):

Treasuries continued their rebound today on the back of very weak European PMI data and slightly increasing concerns regarding Chinese growth.

Overall the moves in fixed income were more muted today compared to yesterday, but there was still good activity in the market. Amidst a lot of talk of pending asset allocation into month end (out of stocks and into bonds), we did see some real money buying of the long end which was supportive of this story.

We also had macro buying in 10s, real money selling in 10s and mixed activity in 5s, and central bank selling in 3s.

In swaps we had some 2s5s10s unwinds, and in TIPS, we saw better selling of 30s and off the run 10s before the auction, and afterwards we saw better buying of 10s.

Treasury broker volume today was 81% of the 10-day average.

OCBC Investment Research, on the other hand, reported:

Renewed weakness on Wall Street overnight and the poor Nikkei start (-1% now) could continue to weigh on local sentiment today; but downside could be limited as the STI has already seen a fairly sharp correction of 0.9% yesterday afternoon due to the sharply lower European markets' opening.

Assuming the index can hold above the immediate 2960 support (recent minor trough), we could potentially see a technical rebound back towards 3000.

Below 2960, the subsequent base lies at the 2900 key resistance-turned-support. On the upside, 3030 (recent peaks) remains the key obstacle to overcome, followed by the subsequent resistance at 3065 (trough in Jul '11).