Market Update - 30 July 2012

USD/MYR opened lower this  morning, following the firm tone on preserving the EUR from ECB President Mario Draghi

Draghi sparked a global market rally last week by pledging to do whatever it takes to preserve the euro, is trying to build consensus among government  and central bankers for a plan to ease borrowing costs in Spain and Italy before ECB policy makers convene on Aug 2

Wall Street continued to rise with the Dow +1.46%, S&P +1.91% and Nasdaq +2.24%.

FOMC will want to wait for more data, particularly on employment, before making any significant policy changes. If the economic data disappoints, the September meeting as a likely time to change policy, as the Fed’s updated economic projections will be released.

Investor sentiments are largely perked by Draghi’s comment to strengthen the Eurozone’s financial health.

Asian stocks advance for a third day, with the regional benchmark index extending the biggest gain in a month, on optimism European policy makers will act to ease the region’s debt crisis, Japanese shares advanced after the nation’s industrial production fell at a slower pace

KLCI gained a marginal 0.06% to 1,624.94 at closing on Friday. With expectation that the positive sentiments will be sustained today following gains in the regional bourses, we look for the KLCI to sustain its rally to a resistance of 1,631.5.

S&P affirmed Malaysia’s “A-/A-2” foreign currency and “A/A-1” local currency sovereign credit ratings with the outlook on the long-term rating remaining stable.