Singapore Markets Morning Briefing - what you need to know for Wed Jan 25, 2012

The local bourse is not likely to get much help from the happenings on Wall Street and the Nikkei.

OCBC Investment Research said:

The muted reactions on Wall Street overnight and the mild positive Nikkei start (+0.4% at the moment) are unlikely to provide any significant cues to the local bourse this morning.

Following the sharp 1.4% rally last Friday and with most local investors probably still taking an extended break from the festive holidays, the STI could potentially face some profit-taking pressure from short-term traders today.

Nevertheless, the 2793 immediate support (resistance-turned-support) remains a fairly strong base at the moment, with the subsequent support pegged at 2735 (minor resistance-turned-support and 100-DMA).

On the upside, we still see the vital resistance at around 2910 (key support-turned-resistance), with the subsequent obstacle marked at the 3000 key psychological level.

Meanwhile FX Strategist at RBS noted:

The early trade was risk off, mainly due to Greek PSI concerns, but this was steadily reversed throughout the NY session as optimism continues to be the underlying theme for global markets (aided by today's Richmond Fed release).

Many of the European bank shares, which led the down-trade in European stocks, ended the day in a range of +2% to -3% - after being -5% to -7% when I walked in. Treasuries lost their early bid, but the reaction was tepid; overall I would describe today as a pause ahead of the FOMC tomorrow, and some consolidation after 4 straight days of lower prices.

We saw two way flows in the front end, fast money selling in 7s, two way from foreign real money in the 5yr area, and central bank selling of 3s. The swaps desk saw receiving in the belly of 5s10s30s fly and curve spread steepeners. They also noted that there was a good receiver in long end spreads away. Total Treasury broker volume today was 97% of the 10-day average.