Singapore Markets Morning Briefing - what you need to know for Thurs March 15, 2012

There was mixed and muted reaction on Wall Street while China bore some bad news.

IG Markets Singapore said:

Cometh the STI breaching 3,000, cometh the pullback from nervous profit-taking. The bulls will be hoping this slightly-adapted quotation doesn’t ring true today as the STI starts the day having broken the 3,000 psychological barrier again this year.

Swept on a wave of economic optimism, albeit being generated solely from the US, not even more dampening news from China could stop the STI putting on 1.3% yesterday.

But today traders will have digested Chinese premier Wen’s negative comments about the property market which he says is still priced too high, delaying any easing of curbs on buyers. Yesterday it led to a big slump on the Shanghai Composite pushing it down 2.6%.

And last night this negative sentiment found its way into US markets which had a subdued night as a result. Among the major averages, the Dow Jones Industrial Average was up 0.1% at 13194. The S&P was down two points at 1394 and the NASDAQ added a point to finish at 3041.

Talk is growing of China now showing signs of a hard landing, with so much data now coming out revealing cracks in the soft landing argument. A stubbornly-high property market, ballooning imports, shrinking exports and a downward revision of GDP growth all announced in the last few days have the hard-landing camp rubbing their hands with glee.

Meanwhile OCBC Investment Research noted:

The mixed and muted reaction on Wall Street overnight is unlikely to provide much inspiration to the local bourse this morning.

As a recap, the STI displayed some great positive signs yesterday with a bullish break out of its 1-month consolidations pattern; following a 0.8% higher opening, the index climbed steadily to a 1.3% gain by the close.

But with the market likely to see a technical correction today after yesterday's strong display, we could see the index consolidating around current levels with the initial support marked at the 3000 key psychological level.

Beyond that, we see the subsequent support at the 2900 key resistance-turned-support. On the upside, 3030 (key peak in Feb '12) is the immediate obstacle to overcome, followed by the next resistance at 3055 (support-turned-resistance).