Market Update - 3 August 2012

Draghi yesterday announced the ECB is working on a plan to re-enter the bond markets and took the unusual step of naming Weidmnn as the only policy maker to object to the proposal.

President Draghi hinted that open market operations may be implemented, but more details will only be revealed in the coming weeks. He also commented that it is "pointless to go short on the Euro (and) the euro is irreversible."

Asian stocks dropped for a third day and the dollar climbed after ECB President Mario Draghi failed to deliver immediate action to support the euro and a surge in Spanish bond yields added to concern about the regions’ debt crisis.

Wall Street edged down as investors were largely disappointed at the ECB's decision last night: the Dow -0.71%, S&P -0.74% and Nasdaq -0.36%. Markets flocked back to safe haven assets with the US 2y and 10y TSY falling 0.8bp and 5.8bp respectively.

KLCI edged 0.06% higher to 1,633.45 at closing yesterday as investors awaited for the ECB decision last night. Disappointed by the ECB's decision, the hype over a potential "bazooka" intervention should fade to pessimism once again.

USD/MYR opened up higher this morning. USD/MYR expected to trade circa 3.1300 – 3.1500