Singapore Markets Morning Briefing - what you need to know for Wed Feb 15, 2012

US stocks closed unchanged but the Nikkei started strong.

OCBC Investment Research said:

Although US stocks closed flat overnight, the strong Nikkei start (+1% now) could keep local sentiments fairly buoyant this morning.

As a recap, the STI continued to consolidate just under the 3000 key psychological resistance yesterday; following a flat opening, the index edged higher to a 0.4% gain by the close.

And with today's tone likely to remain slightly more upside biased, we could see the index inching higher towards the 3000 key psychological resistance, with the subsequent obstacle pegged at the 3070 support-turned-resistance.

On the downside, we still see the immediate base at the 2931-2939 gap support, followed by the next support at 2874 (recent trough).

Meanwhile GFT noted:

As the problems in Europe persists, the rally in the EUR/USD continued to fizzle with the currency pair falling to a low of 1.3080 intraday.

In the beginning of the week, Greek Prime Minister Papademos could almost taste victory after securing enough votes to win Parliamentary approval for further budget cuts. Unfortunately he was short on details and has failed to secure the blessing of Eurozone finance ministers, a crucial step in unlocking bailout funds. If the Eurogroup refuses to sign off on the deal, no money will be disbursed, forcing Greece to default.

The region’s finance ministers were scheduled to hold an in person meeting on Wednesday to discuss and hopefully approve a second bailout for Greece but the lack of sufficient paperwork has led to their decision to forgo an in person meeting and to conduct a conference call instead.

With their usual Eurogroup meeting scheduled for February 20th, the goal of the emergency meeting tomorrow was to hash out all of the details so that they could put the finishing touches on Monday. Now that the meeting has been demoted to a conference call, we don’t expect any progress or a decision on releasing bailout funds to be made in the next week. 

RBS, on the other hand, reported:

Just when you thought it was safe to dive in the water, Europe again sends risk assets sinking on concerns that Greece has not done enough to satisfy its EU lenders.

Relations between Germany and Greece seem particularly chilly, sending a shudder through the markets that pushed Treasuries yields lower, led by the long end. It wasn't until late that stocks rallied from more than -10, back to near unchanged, when Reuters reported Greece's New Democracy's Samaras would commit to austerity (that's all it takes now-a-days).

We saw two-way from central banks, early domestic real money buying of 10s and 30s from a few accounts, foreign real money buying of 7s, and later some domestic selling in 7s and 10s. In swaps we had quiet flows with some receiving in 5s and in the long end, and in TIPS we saw a lot of switches and 2 way flow from 5s on out. Total Treasury broker volume today was 108% of the 10-day average.