Singapore Markets Morning Briefing - what you need to know for Mon May 14, 2012

The STI has shed 4% but a technical rebound is expected for the index.

OCBC Investment Research said:

Despite the mixed reactions on Wall Street last Friday night, the positive Nikkei index (+0.6% now) might offer some consolation for the local bourse this morning.

As a recap, the STI took a turn for the worse last Friday; after a 0.1% lower opening, the index retreated south persistently to end the day more than 0.7% in the red and breaching the 2900 key resistance-turned-support at the same time.

But with today's tone likely to show a slight improvement, we could see the index initiating a technical rebound to retest the 2900 level. A failed retest could result in a quick retreat towards the next support at the 2852-2860 gap support.

Above 2900, the subsequent obstacle is pegged at the 2950 support-turned-resistance.

IG Markets Singapore meanwhile noted:

Traders will be hoping this week starts better than last week after markets tumbled following Greek’s political chaos. But the markets were only pre-empting what might happen and, one week on, these predictions look spot on.

Greece looks set to head the polls again next month and talk is growing of the Greeks leaving the eurozone. With this dramatic sort of talk in the air it is likely to lead to some cautious trading sessions this week.

Risk-on sentiment wasn’t helped by JP Morgan’s $2 billion of losses that rocked Wall Street on Friday. It wasn’t so much the size of the black hole but the fact that trading desks can still so quickly and easily run up such debts.

The timing wasn’t great either with so many dark clouds hanging over the global economy in the shape of a possible Greek eurozone exit, shaky Spanish banks and weak Chinese trade figures.

Friday saw US consumer confidence hit its highest level for four years but this did little to lift markets revealing just how downbeat they are with so much uncertainty present.

Investors are unlikely to see a turnaround this week but will be keeping their fingers crossed that we see no repeat performance from last week’s dismal performance across global markets.

The STI shed 4% last week and had the double whammy of Greek uncertainty mixed in with local concerns following some poor Q1 corporate earnings from some of the economy’s biggest hitters.

The futures markets is pointing to a weaker opening for the STI this morning. While the stormy clouds of a euro meltdown linger many traders will be sitting on the sidelines watching how this one plays out.