Singapore Markets Morning Briefing - what you need to know for Tues May 15, 2012

Japanese and Australian equities have already opened weaker following losses on Wall Street and the continued concern over Greece, and the STI is likely to feel the effects.

OCBC Investment research said:

The local bourse is likely to be spooked by renewed weakness on Wall Street overnight – note that the Nikkei opened 0.7% lower but is now 1.1% on worries over Greece.

Although the STI already fell 0.7% yesterday, we could continue to see more profit-taking, especially since 2900 now appears to be a pretty tough hurdle to clear.

As such, we could see the index slipping past the initial 2850 support towards 2800.

Above 2900, the next barrier can be found at 2950.

We expect defensive stocks to remain in focus, with yield plays close behind.

IG Markets Singapore meanwhile noted:

It was a case of “same same but different” yesterday as continued fears of a Greek exit capped another dismal start to the week.

It was a sea of red across Europe and Wall Street as investors try to assess what damage would be done if a new Greek government ripped up the terms of its debt agreement and was forced to leave the eurozone.

Spain and Italy are greatly at risk of a Greek exit given their exposure to Greek debt and the fragile state of their economies and banking sectors. All this will weigh very heavily on the hearts and minds of traders this week as risk-on trading goes into hibernation.

On Wall Street the S&P 500 and NASDAQ lost 1.1% while the Dow Jones Industrial Average dropped 1%.
In Europe it was close to carnage as the FTSE 100 plummeted 2%, the Dax 1.9% and the CAC 40 saw 2.3% of its value wiped off.

Singapore caught the tail-end of Europe’s weak open yesterday as the STI dipped into the red during the last hour of trading. Asian markets are likely to get a full smack in the face today. Japanese and Australian equities have already opened weaker.