SG Market: Spore shares are expected to open weaker after US stocks tumbled on growing worries of a global recession after some poor US economic data & amid fresh concerns over the risk exposure of European banks. As equity markets suffered another day of heavy losses, both Morgan Stanley & Goldman Sachs have cut their forecasts for global growth this year & in 2012. There are also fears that German banks may be downgraded, which let to the 5.8% rout in the DAX. Meantime, Danish banks are dumping assets to escape the debt funding wall while Austria is demanding collateral from Greece in exchange for bailout loans & Sweden warns of a collapse in the interbank market.
Although the STI has held up quite well due to heavy capital inflow into Spore in the past few days that has brought the SGD swap offer rate to negative levels & support for the Jardine stocks, the nascent recovery from last week's 2720 low looks to be running out of steam & could be re-tested in the near term. Immediate support uis at 2780 but that mey be taken out as the next wave of selling is just starting. Amid renewed fears of a recession, watch for downside in cyclical sectors such as shipping, offshore support, rigbuilders & commodities.
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