MARKET TALK: USD/SGD Has Scope To Fall;Players Watching Stocks

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0105 GMT [Dow Jones] USD/SGD "can still drop" further after 100 pip fall yesterday, with players watching stock market for signs of new capital inflows, says trader. Pair may next test 1.5050, low last touched July 25, with potential to keep sinking if equities stay supported through session. Benchmark STI opens up 3.5% following 2.9% surge in S&P 500 overnight. USD/SGD last 1.5069, down from 1.5166 late in Asia. (JRJ)

0104 GMT [Dow Jones] HSI may rise 600-700 points, tracking gains in regional bourses after Fed cuts rates 50 bps, which more than expected, says ICEA's Ernie Hon; "the overhang of a U.S. rate cut has been settled to ease credit concerns,I think local trading sentiment will get a boost with banks here likely to follow with a 25 basis point rate cut." Property names may rise 4-5% to leadgains as HK banks expected to follow Fed move. PCCW (0008.HK) may not react much to unexpected news that chairman of Smart Rich (1051.HK) would like to make a bid, as PCCW says it has not been contacted, bid unlikely to materialize; CCB (0939.HK) may rise as price set at top end of range at CNY6.45 for A-share IPO. Index down 0.1% at 24576.85 yesterday.(SUT)

0103 GMT [Dow Jones] Impact of Fed's cut in interest rates last night may lead to rise in China shares today as more hot money will likely flow into country in anticipation of CNY gains. Shanghai Composite +0.1% at 5425.21 yesterday in 5th straight session of gains; resistance tipped at 5600. Shenzhen Index fell 0.2% to 1508.82 yesterday. "There will even be more money sloshing in China after the Fed slash," says Wang Junqing, analyst at Guosen Securities. Upcoming IPOs not expected to curb bullish sentiment, because CNY2.26 trillion in funds gathered by China Construction Bank (601939.SH) during subscription to its A-shares didn't stop markets from rising yesterday. Wang expects steel shares to rise more, cites relatively low valuations. Shanghai Stock Exchange says it may "take emergency measures" today if Typhoon Wipha, strongest to strike city in decade, affects trading or communication system. (NYW)0102 GMT [Dow Jones] Indonesia's domestic bond market likely to rally after Fed's 50bp rate cut overnight. "The Fed rate cut will create more room for Bank Indonesia to cut rates," bond analyst says. Note, Bank Indonesia Governor Abdullah says earlier in week that bank won't automatically follow a Fed rate cut as must also consider domestic inflation.

(IMS)0100 GMT [Nikkei/Dow Jones] December Nikkei 225 futures extend gains and briefly top overnight Chicago close of 16300 due to short-covering. But contract facing some profit-taking above 16300, traders say. Lead contract up 3.2% at 16290 after hitting 16310. (JUO)

0100 GMT [Dow Jones] Short-term U.S. Treasurys in Tokyo hold gains from NY overnight. Fed's 50bp cut may suggest that it's unwilling to cut rates again, so 2-year Treasury yield may move back up to 4.25%-4.35% by next non-farm payrolls result due Oct. 5, says foreign brokerage trader. Adds Fed unlikely to make additional rate cuts unless non-farm payrolls come out in negative territoryagain next month. 2-year note last flat at 100 1/32 to yield 3.978%, 10-year also unchanged at 102 1/32 yielding 4.491%.

(MEF)0057 GMT [Dow Jones] Lead December 10-year JGB futures lower but haven't taken a big hit despite gains in Tokyo shares; "market players aren't rushing to sell bonds ahead of BOJ Governor Fukui's presser" at 0630 GMT, says Daiwa Securities SMBC senior market economist Mari Iwashita. Notes many in market expecting more Fed rate cuts, which should support JGBs. December futures down 0.31 at 135.87, with Nikkei up more than 500 points; 10-year yield +4.5 bps at 1.570%.(HIN)

0056 GMT [Dow Jones] HK banks may not immediately follow in lockstep Fed's 50bp cut in main policy lever, but likely to catch up when liquidity pressure in local market eases after spate of IPOs. "It's up to the commercial banks to decide whether to cut their prime lending rate, but Hong Kong interbank rates were seen higher largely due to the liquidity squeeze from subscriptions to IPOs, which is likely a temporary condition," says HKMA chief executive Yam earlier today. Adds 50bp rate reduction by Fed "more than expected", but unlikely beginning of downward trend.(JYC)

0053 GMT [Dow Jones] Singapore government bonds likely to rise following Fed's 50bp cut, with yield curve expected steeper as 2-to-10-year U.S. Treasury spread widened 9 bps overnight. However, OCBC strategist Selena Ling says SGS curve "has already been steepening" in recent sessions so shift may be more moderate. Adds, SGS 2-year yield expected to drop, but should find "immediate support" at Monday's intraday low of 2.00%. SGS 2-year bid-side yield finished +3 bps at 2.06%, 10-year +3 bps at 2.74%. (JRJ)

0051 GMT [Dow Jones] Korea T-bonds rise slightly after Fed's 50bp rate cut with 3-year yield quoted down 1 bp at 5.35%, 5-year down 1 bp at 5.39%; December futures +3 ticks to 107.11. Still, bonds not reacting much to Fed move as "there is no strong pressure for a rate cut in Korea since recent economic data have still been strong and liquidity is still high," says local securities firm trader. Also, CD rate hovering near 6-year highs, thus medium-, longer-term bonds less attractive. Traders expect 3-year yield in 5.33-5.37% band, 5-year 5.37-5.41%.(PVA)

0049 GMT [Dow Jones] Federal Reserve interest rate cut prompts turnaround in sentiment for base metals, LME copper near 6-week high of $7,702/ton. Gains look solid, copper rally on Fed cuts helped by firm fundamentals that "haven't changed on the past few months," says National Australia Bank analyst Gerard Burg. Copper's current level fundamentally justified by strong China demand, he says. LME 3-month copper last trades at $7,695, up $110 vs PM kerb. (EFB)

0048 GMT [Dow Jones] Australian economic growth appears to be peaking, will keep RBA on sidelines, Westpac says. Westpac-MI leading index of Australian economy +4.6% in July annualized vs 4.9% in June; index growth still above trend but weakening. Credit market conditions still a concern for RBA; says Fed rate cuts will help growth and ease conditions over long-term but RBA likely to remain on hold in meantime. Further restraint could come from rise in retail funding costs as institutions pass on higher borrowing costs. RBA lifted rates 25 bps to 6.5% in August.(SRH)

(END) Dow Jones Newswires

September 18, 2007 21:05 ET (01:05 GMT)