Singapore Markets Morning Briefing - what you need to know for Fri Feb 17, 2012

There was strong rebound on Wall Street and the Nikkei started impressively.

OCBC Investment Research said:

The strong rebound on Wall Street as well as the impressive Nikkei start (now +1.6%) are likely to cue the local bourse to a positive start.

But overall sentiment continues to remain cautious, with the daily MACD converging towards a negative crossover high in the positive region, thus suggesting that the market may still be uncomfortable above 3000 level.

Above 3000, the next cap is likely at 3037 (top Bollinger band), ahead of 3138-3172 (gap).

On the downside, we peg the initial support at the 2950 recent minor trough, with the next likely at 2910-2916 region.

Meanwhile GFT noted:

U.S. stocks traded sharply higher today on the renewed hope that Greece will avoid default. This is an evolving situation that changes day by day and today, investors have chosen to buy into the speculation.

Amidst all of the uncertainty about Greece, U.S. economic data continues to surprise to the upside (at least the important reports). Weekly jobless claims dropped to 348k from 361k, the fewest since March 2008. This is the first time that we have seen claims fall below 350k in nearly 4 years and the significance has not been lost on investors.

The Philadelphia Fed index also rose to a four month high of 10.2 from 9.0, a sign that the manufacturing sector continues to fuel the U.S. recovery.

RBS, on the other hand, reported:

Markets continue to be subject to the ping-pong back and forth of Greek headlines, and today's end result of all the news was favorable for risk assets, especially the signal that European central banks (ECB included) are getting involved in some manner with the debt swap.

One can almost see the ministers come out of yesterday's meetings, look at their market screens, and wake up the next day seeing the need for some positive news (and with their Reuters or Dow Jones contacts cued up on speed dial).

In any case, the feeling of progress for Greece is back, and the combination of better European news and ongoing good US data (claims in particular) had Treasuries on the defensive and US equities on the rise. A 7bps tail on the 30yr TIPS auction didn't particularly help Treasury market sentiment in the afternoon either, so Treasuries were weak just about all the way to the close.

As for Greece, one can only hope that come Monday, all these leaked promises are fulfilled.