Market Commentary

Key Notes: US markets resumed their upward climbs after European Nations reported well-received debt auctions. Though the rally seems muted, it does indicate that the bullish sentiments continued after last week. We think that these positive sentiments will spill over to Asian markets today. We might see STI and Hang Seng gaining should the sentiments continue to be bullish. The established resistance for STI and Hang Seng is at 3,030 and 22,000 respectively.

On currencies, Euro strengthened against the Dollar after successful debt auctions in European Nations help to improve the attractiveness of currency. For the day ahead, we eyed the initial claims as the important piece of data that might move the markets. Median economists are estimating 470k, a reduction of 2k from previous months. We think the number could be closer to 460k. Should the numbers print out better than anticipated, we might see Euro strengthening as investors will be more willing to take on riskier assets. The established resistance for EURUSD is at 1.2800.

Market Summary

  • US: US stocks advanced as concerns that Europe’s sovereign debt crisis will derail the global economic recovery has eased. JPMorgan and BOA gained at least 1.2% and European stocks rose on improved demand for Portuguese and Polish bonds. Goldman Sachs Group added 1.6% as KKR & Co. and Perella Weinberg Partners were said to be in talks to hire its U.S. proprietary trading group. Apple rallied 2% after receiving an upgrade by UBS. On the economic front, a report by Fed showed “economic growth at a moderate pace” at five regional banks, while two pointed to “positive developments or net improvements.” The remaining five banks said conditions were mixed or decelerating.
  • Europe: European stocks rose as improved demand for government bonds from Portugal to Poland helped ease concerns about sovereign debt and shares of BP Plc advanced. BP gained for a seventh straight day as its credit rating was raised three levels and the company released its internal investigation on the Gulf of Mexico oil spill. Sanofi-Aventis rose 2.1% after Citigroup raised its price estimate for the drugmaker. Stocks had a good outing after Portugal’s sale of bonds due 2021 attracted bids for 2.6 times the amount offered, compared with a bid-to-cover ratio of 1.6 in the earlier March sale. An auction of five-year debt by Poland also attracted the biggest demand since 2008.
  • Asia: Asian stocks fell on concerns that a stronger Yen will hurt Japan’s economic growth. Canon dropped 2% while Honda Motor lost 2.7%. BHP Billiton slipped 1.3% as commodity prices slumped.
  • Singapore: STI lost 0.81% to close lower at 3,011.42. Volume was 1.67 billion shares worth $1.18 billion. Gainers led losers 255 to 196.
  • Currencies: The Dollar traded near its lowest levels since mid-August against higher-yielding counterparts including the Australian and Canadian currencies before reports that may add to evidence the global economy is expanding. The Aussie was near a one-month high before a jobs report that may increase pressure on the central bank to resume raising interest rates.

Key events/data to look out for:

  • US: Initial Claims.
  • UK: BOE rate decision.
  • Euro: CPI.
  • Japan: Consumer Confidence.
  • China: Trade Balance.