Singapore Markets Morning Briefing - what you need to know for Tues April 3, 2012

The STI started the quarter well on Monday holding above 3,000 following the release of China’s manufacturing data.

OCBC Investment Research said:

The continued recovery by US stocks overnight is likely to cue the local bourse to a positive opening this morning although the negative Nikkei start (-0.4% now) could limit the gains.

As a recap, the STI continued to trend higher just above its 6-month uptrend support yesterday; following a 0.1% higher opening, the index inched higher to a 0.2% gain by the close.

And with today's tone likely to remain a tad more optimistic, we could see the index treading higher in the direction of the 3030 vital resistance, with the subsequent obstacle pegged at the 3075 support-turned-resistance.

On the downside, we still see the immediate base at 2975 (recent trough), followed by the next support the 2900 key resistance-turned-support.

IG Markets Singapore meanwhile noted:

Wall Street kicked off the second quarter with a strong performance after US manufacturing data picked up more than expected last night.

The ISM manufacturing index increased to 53.4 for March while factory employment rose to its highest level since June sending equities and commodities higher.

Among the major averages, the Dow Jones Industrial Average was up 0.4% at 13264, its highest level since December 2007.

The S&P 500 was 0.8% higher at 1419, which sent it back to its near four-year high. The benchmark index is only 10% off its record high from October 2007 which is now looking a realistic target for US bulls.

But Eurozone manufacturing numbers were weaker highlighting its growing divergence with the US economy. While one economy seems to recovering the other is flirting with recession.

However European stock markets were in a buoyant mood. The DAX was up 1.6%, the CAC 40 rose 1.1% while the FTSE 100 soared 1.9% with UK manufacturing coming in better than expected.

China stock markets are currently closed for a holiday until Thursday when the world’s second biggest economy will have a chance to digest its own upbeat factory output figures along with those of the US.

While many traders were happy to partake in an optimistic start to the second quarter, many decided to sit on the side lines with such a data-heavy week ahead.

Fed minutes will be released tonight while Wednesday and Thursday sees ECB and Bank of England interest rate decisions. But the big economic event of the week will be non-farm payrolls data out on Friday. But with this coinciding with Good Friday, most big markets will be closed which may dampen any bullish sentiment when they reopen.

The STI started the quarter well yesterday holding above 3,000 as it gained from China’s manufacturing data, which is still being scrutinised given HSBC’s rival survey saw contraction for the fifth straight month.

On the local market, a stock on the trader radar is Sembcorp Marine which has signed another multi-million dollar deal. The world’s second biggest rig builder has seen its share price rise 37% in quarter one, outperforming its rival Keppel Corp.

Also in the spotlight are DBS shares which will trade again this morning after being suspended yesterday during its Danamon bid announcement.

Despite the bullish Wall Street session last night, the futures market is pointing at a softer open for the STI this morning.