Singapore Markets Morning Briefing - what you need to know for Thurs May 3, 2012

Traders sentiment was downbeat with the Dow Jones Industrial Average down 0.1% at 13269 and the S&P 0.3% lower at 1402.

OCBC Investment Research said:

The mixed reactions on Wall Street overnight and the mildly positive Nikkei start (+0.3% now) are unlikely to provide any significant inspiration to the local bourse this morning.

As a recap, the index built on Monday's upside momentum and initiated a fairly strong recovery yesterday; following a 0.3% higher opening, the index recovered steadily to a 0.9% gain and closed at its intraday high.

But with the 3010 immediate resistance lying just around the corner, the index could potentially face some near term resistance for now. Should this obstacle be cleared, the subsequent key resistance lies at 3030 (various key peaks).

On the downside, the immediate support remains at 2946 (recent trough), followed by the vital base at the 2900 key resistance-turned-support.

IG Markets Singapore meanwhile noted:

Maybe the old adage of selling in May and going away still holds some weight as markets took a tumble last night due to weaker US employment print and slumping eurozone factory activity.

It had looked like a bout of May momentum was gathering pace with firmer US and Chinese manufacturing output ushering in the start of the month. But ADP figures showing US employment rose by 119,000, compared to an expected 177,000 soon burst the bubble.

Bleak eurozone unemployment data also did its bit to remind traders that any global recovery will not be in a straight line but instead a road filled with potholes and sharp bends.

On Wall Street last night the Dow Jones Industrial Average was down 0.1% at 13269. The S&P was 0.3% lower at 1402, while the NASDAQ added 0.3% to finish at 3060.

Risk off sentiment was firmly back on the table with such poor unemployment numbers from the eurozone as they hit record lows among member states. The ECB meets later today although no change in interest rates or monetary easing is expected.

But the pressure is on policymakers to act as the eurozone slides closer to a recession, which may be a prolonged one given the very high unemployment rates and severity of budget cuts to be introduced.
A flight to safety saw inflows to the US dollar and German bunds, which fell to a new low of 1.6%.

In Asia today we are likely to see a spill-over of this downbeat sentiment among traders. Once again, investors are calling into question the strength of a US recovery which plays such a determining role for the rest of the global economy.