Singapore Markets Morning Briefing - what you need to know for Thurs April 12, 2012

Amidst recovery from Western markets, the STI is hoping to recover after slumping 1.2% on Wednesday for its biggest one day loss of the year.

IG Markets Singapore said:

US and European equities regained some poise last night although it took suggestions of central bank asset-buying to put the brakes on the five-day slide.

Markets have been sunning themselves with a worst-is-over-for-eurozone mentality only to be caught in a thunderstorm of Spanish and Italian debt fears. With Europe’s third and fourth-largest economies struggling to balance tough austerity measures while reducing government debts, traders have become very nervous about the crisis re-igniting.

But all it needed was the soothing words of an European Central Bank member to suggest that more asset-buying may take place to calm the markets. Never mind the gargantuan government debts, threat of a deep recession and no growth anytime soon.

The FTSE 100 gained 0.7%, the DAX was up 1% while the CAC 40 rose 0.6%. US markets were helped with commodity player Alcoa kicking off the earnings season with an unexpected profit for Q1. These results were a welcome shot in the arm for the recently bleak outlook on the world’s largest economy.

Both the S&P 500 and the Dow Jones Industrial Average rose 0.7% last night. But the Beige Book did little to change sentiment reiterating the US economy was growing at “a modest to moderate pace.”

So for a quantitative easing (QE) recap: ECB – back on the cards, Fed – temporarily off the cards, PBOC – always on the cards, BOJ – always on the cards.

In Singapore, the STI slumped 1.2% yesterday – its biggest one day loss of the year – and will be hoping to steady the ship after last night’s slight recovery from Western markets. The futures markets is pointing at a firmer open for the local market this morning.

OCBC Investment Research meanwhile noted:

The technical rebound on Wall Street overnight and the positive Nikkei start (+0.3% now) are likely to boost local sentiments this morning.

As a recap, the STI headed south again yesterday despite the fairly strong rebound on Tuesday; after tumbling more than 0.7% at the open, the index slipped further to a 1.2% loss by the close.

But with today's tone likely to show some improvement, we could see the index initiating another technical rebound back in the direction of the 2980 minor support-turned-resistance.

Beyond that, the key obstacle is still pegged at the 3030 key peak resistance. On the downside, 2900 (key resistance-turned-support) is now the immediate base for the index, with the subsequent support now marked at the 2874 minor trough.