Singapore Markets Morning Briefing - what you need to know for Thurs Feb 2, 2012

Good news is that fairly strong opening is expected today.

OCBC Investment Research said:

With US stocks rallying overnight and the Nikkei starting positively (+0.8% now), these are likely to inspire the local bourse to a fairly strong opening this morning.

As a recap, the STI continued to show strength yesterday despite facing some earlier selling pressure. At one point, the index was losing as much as 0.8% but towards the late afternoon, it recovered strongly to end the day just 0.1% lower.

And with today's tone likely to turn more upside biased, we could see the index attempting another vital test of the still unconquered 2916 key obstacle (key support-turned-resistance). Meanwhile, the subsequent resistance is still pegged at the 3000 psychological level.

On the downside, we still see the 2852-2860 gap support as a relatively strong base but should it be compromised, the next floor is at 2790 key resistance-turned-support.

Meanwhile GFT reported:

On Tuesday, we wrote that good news was needed quickly to prevent currencies from failing at key levels and good news was exactly what we had overnight.

Despite concerns about slowing global demand, the Chinese manufacturing sector expanded at a faster pace in the month of January. Fears of a hard landing have been allayed by each piece of incoming Chinese data which tell us that at worst the Chinese economy will slow gradually this year.

In the Eurozone, Germany’s PMI manufacturing index was also revised higher indicating the sector expanded at a faster pace last month. Although many experts including those within the European Central Bank believe that the Eurozone could be headed for recession this year, so far we have seen very little evidence of that in Germany or France, whose economies account for 48 percent of Eurozone GDP.

Until there are consistently weak economic reports from either country, the threat of EZ recession will not be the market’s greatest concern.

RBS, on the other hand, noted:

Broadly stronger than expected global January PMI data helped fuel risk seeking sentiment during the NY session.

In particular, the stronger data in China, the UK, and an upward revision to final Euro-area data boosted sentiment during the European morning and the 1 point rise in the US ISM manufacturing to 54.1 in January added to the positive environment for riskier assets and higher beta currencies.

Amongst the G10 nations that have reported January data, only the PMIs in France and Switzerland declined in January. US equities rose during the morning session and held onto their gains into the close (S&P 500 closed 1324.08, up 11.67).