Singapore Markets Morning Briefing - what you need to know for Thurs April 26, 2012

Signs point to a stronger opening for the STI following Nikkei’s positive start and the rally of US markets.

OCBC Investment Research said:

The rally on Wall Street overnight and positive Nikkei start (up 0.5% now) are likely to boost local sentiments this morning.

As a recap, the STI continued to consolidate in a muted fashion yesterday; after a 0.3% higher opening, the index barely moved for the rest of the day. By the close, the index was just about 0.2% in the black.

But with today's tone likely to show some improvements, we could see the index inching higher towards the 3010 (recent peak) immediate resistance.

Beyond that, we still see the subsequent key obstacle at the 3030 vital resistance (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:

The door to more Fed monetary easing may have closed a little more last night but while it still remains ajar there is hope for QE3 junkies.

While talk of monetary easing was never really on the cards last night the Fed gave some cheer by upgrading growth forecasts for the US economy. Policymakers are confident that the weak patch of data we are seeing is just a blip on a gradual road to recovery. But we are unlikely to see a Bernanke Bounce as traders treat this latest statement with caution.

In fact the Fed talked about a Spring drop in activity being “payback” from the warm weather-induced pick up at the start of the year. The tone was also more hawkish as an end to the low interest rate environment was discussed.

But bulls can take heart from the US corporates' forecast-beating first quarter with Apple the cream of the crop. Its stock rose to US$610 last night helping to improve sentiment further.

Apple probably has a higher market value than the combined worth of the eurozone’s peripheral economies.

Among the better-than-expected results announced last night was Las Vegas Sands, owners of Marina Bay Sands hotel and casino, which saw profits more than double in quarter one.

On Wall Street the Dow Jones Industrial Average was up 0.7%, the S&P was 1.4% higher while the NASDAQ surged 2.3%. Apple shares put on nearly 9% and Boeing’s flew more than 5% following positive earnings.

On the commodity markets, oil edged higher off the back of stronger projected US growth this year. WTI crude rose 0.5% to $103.71 a barrel while Brent rose 0.7% to $119.19.

As we head towards a July 1 EU embargo it seems Iran is still keen to do deals with nations to skirt around this ban. The latest could be a tie-up with Russia to halt its nuclear programme in exchange for lifting the sanctions.

But oil is still on an upward trajectory as none of the talk of ramping up supplies and easing tensions with Iran have permanently taken the risk premium out of prices.

Gold did very little last night as it refused to be swayed by Fed’s higher GDP forecasts or another monthly meeting without mention of QE3. It sits unchanged at $1643 an ounce.

In Singapore today we have industrial production figures out at lunchtime. February’s figures saw a 12.1% rise on a year-on-year basis but this was skewed by Chinese New Year falling in January this year.

These figures are proving very hard to predict as different sectors overperform (such as biomedical) and boost overall factory output masking slumps in more traditional areas (electronics).

The futures market is hinting at a stronger opening for the STI this morning after a relatively flat session yesterday. Already Japanese stocks have risen this morning with tech stocks leading the charge.