Singapore Markets Morning Briefing - what you need to know for Mon April 9, 2012

Signs point to a weaker STI opening amidst bad news on US employment and the soft Nikkei start.

OCBC Investment Research said:

Although Wall Street ended muted last Thursday night, the sharply lower US index futures (-1% now) and the poor Nikkei start (-1.5% now) are likely to dent local sentiments this morning.

As recap, the STI had turned in a muted session in the last session with a flat close; at the same time, forming a relatively strong base at around the 2975 support (recent trough).

But with today's tone likely to deteriorate quickly, we could see the index breaking this 2975 immediate base before slipping further in the direction of the 2900 key resistance-turned-support.

On the upside, 3030 remains the vital resistance to overcome in the near term, with the next obstacle pegged at the 3075 support-turned-resistance.

IG Markets Singapore meanwhile noted:

Stock market confidence has been dealt a series of blows which could lead to caution and consolidation among traders this week.

The latest of these body punches to market optimism was dealt on Friday with US government employment figures coming in well below market expectations.

Traders were hoping non-farm payrolls data would help end the week on a high but they came in at just 120,000 for March, woefully short of the consensus 205,000.

Last week the Fed hinted that QE3 was slipping down the agenda, in an attempt to wean the markets off the cheap liquidity they have becoming addicted to. Traders went into shock and the markets tumbled.

It came in the same week that eurozone concerns resurfaced with Spain struggling to sell its government debt without having to increase yields. Expect plenty of “pain in Spain as debt fears remain” stories.

Global markets suffered and the pressure mounted on non-farm payrolls data to continue the positive trend of adding more than 200,000 jobs each month this year. Traders were already worried unemployment wasn’t coming down fast enough and the US’s economic recovery was built on shifting sand. All eyes will now be on US corporate earnings for Q1 which will start trickling out this month. But the early signs on these don’t look good.

Thankfully, the US market were closed on Good Friday along with most major bourses preventing traders from pushing the panic button. But when they reopen this week the reaction may still be the same.

Asian traders are likely to remain cautious, waiting for US and European markets to reopen to gauge how much damage the latest US employment bombshell has done. But the mood is already gloomier with the Nikkei 225 opening much softer this morning.

The futures market is pointing to a weaker open for the STI this morning.