Singapore Markets Morning Briefing - what you need to know for Tues Feb 21, 2012

Nikkei is having a flat start while the STI is expected to keep up its momentum.

Justin Harper, IG Markets Singapore head of research, said:

The STI staged an eleventh-hour rally yesterday and will be looking to keep up the momentum today although the catalyst is unclear. Up a healthy 0.7% to 3021.2, the STI could start the next leg of this bull run which has seen it put on 14% since the start of the year.

Yesterday the markets were massively buoyed by China’s easing of monetary policy coupled with progress in EU talks over the latest Greek debt settlement. While an agreement looks likely to be signed in the coming days, this may now well be priced into the markets with a bout of “buy on the rumour, sell on the fact” mentality taking hold.

But while a short-term pullback can’t be ruled out the longer-term picture of Europe’s health, and the staving off of a messy default, may give markets some positive direction for the coming months.

However, when it comes to Europe it is never that simple as upbeat news is always tainted with fearfully negative news. Today’s helping is the worry that Greece may need a third bailout as its economy is likely to suffer so much from the austerity measures it has agreed to.

Meanwhile OCBC Investment Research noted:

With US market closed for public holiday overnight and the Nikkei having a muted start (flat at the moment), these are unlikely to provide any significant inspiration to the local bourse this morning.

Meanwhile, the STI continued to inch higher in the last session; after opening 0.7% in the black, the index pull backed to the 3000 psychological level but recovered to end the day back at its opening level again.

But with today's tone likely to turn more muted, we could see the index consolidating around current levels with the 3000 being the immediate support and the subsequent base at the 2950 recent minor trough.

On the upside, the immediate obstacle is pegged at around 3050 (support-turned-resistance), with the next resistance at the 3100 psychological resistance.