Singapore Markets Morning Briefing - what you need to know for Thurs Jan 19, 2012

Expect the local bourse to open higher today, thanks to the strong recovery on Wall Street and positive Nikkei start.

OCBC Investment Research said:

Following the strong recovery on Wall Street overnight and the similarly strong Nikkei start (+0.8%), we are likely to see the local bourse opening higher this morning.

Despite climbing as much as 0.3% higher yesterday morning, the STI gave up all the prior gains after lunch to end the day nearly 0.7% back in the red.

And with yesterday’s technical correction coming to a stop just above the 2793 resistance-turned-support, we could see the index rebounding off that level today and continue its recovery in the direction of the next key support-turned-resistance at 2910.

Above 2910, we still see the subsequent obstacle at the 3000 key psychological level. On the downside, the subsequent base remains pegged at 2735 (minor resistance-turned-support and 100-DMA).

Meanwhile GFT noted:

The U.S. dollar lost value against all of the major currencies which is good for the market because it means investors have grown less risk averse. How long the easing of safe haven flows will last remains to be seen but for the time being, many currencies including the euro are experiencing strong rallies.

This morning’s U.S. economic reports do little to threaten the improvement in risk. Producer prices fell 0.1 percent last month, but excluding food and energy costs, prices rose 0.3 percent. This data shows that the outlook for inflation in the U.S. is relatively stable, providing little concern for the central bank.

Industrial production also rose 0.4 percent, which was slightly weaker than expected but still an improvement from the previous month when activity declined by 0.3 percent.