Singapore Markets Morning Briefing - what you need to know for Fri April 13, 2012

A strong STI open is likely amidst Wall Street recovery and given Singapore’s better-than-expected advance Q1GDP figures.

OCBC Investment Research said:

The continued recovery on Wall Street overnight and the positive Nikkei start (+0.9% now) are likely to keep local sentiments fairly optimistic this morning.

The STI showed some positive signs yesterday following the rebound by US stocks the previous night; after opening more than 0.5% higher, the index rallied further to a 1.1% gain at the close.

And with today's tone likely to remain more upside biased, we could see the index continuing its march towards the 2990 minor support-turned-resistance today.

Beyond that, the key obstacle is still pegged at the 3030 key peak resistance. On the downside, 2945 (minor trough) is now the immediate support with the subsequent key base pegged at 2900 (key resistance-turned-support).

IG Markets Singapore meanwhile noted:

In the global economy, investors pushed the “risk on” button last night as Wall Street enjoyed its biggest two-day gain this year.

Hints that the earnings season might be better than expected, some rosier economic data and hopes of Fed intervention if the picture turns gloomier all did their bit to help markets surge last night.

All the major US markets saw gains of 1.3% and above - the Dow Jones Industrial Average was up 1.4% at 12987. The S&P was 1.4% higher at 1388, while the NASDAQ climbed 1.3% to finish at 3056.

There was some negative news with US new jobless claims rising but traders decided to focus on the positive data last night. In Europe the FTSE 100 powered up 1.3% while the DAX gained 1%.

With investors in a risk-on mood, there were also gains across commodities and risk currencies. We saw major reversals higher in EUR/USD and AUD/USD. Key commodities surged in anticipation of a strong China GDP reading, with copper rising over 2%. USD weakness helped support the commodities.

On the energy markets, oil crept up again excited by the prospect that central banks will stimulate economic growth with more monetary easing. WTI gained 0.9% to $103.64 a barrel while Brent gained 1.2% to $121.76.

The International Energy Agency (IEA) tried to take the pressure out of the market with its latest report claiming the tightness seen in energy markets over the past two years was beginning to ease. This is clearly at odds with most large oil consuming nations who repeatedly complain about tight supply.

This morning we also have China GDP numbers for Q1. Economists have raised the bar slightly and expect them to come in at 8.4%. Observers are still confused as to the true health of the world’s second biggest economy with contradictory and at times questionable data.

China needs its economy to slow down while the rest of the world hopes it won’t. China is expected to contribute about two-fifths of global growth this year. Last night’s lending figures hinted at a gradual slowdown.

The futures market is signalling a strong start for the STI this morning. This could be buoyed further by Singapore’s better-than-expected advance Q1GDP figures.