Market Update - 20 Feb 2013

• Equities delivered another unanimously “risk-on” show overnight, with the FTSE, S&P and DOW all making fresh 5.5 year highs. The Eurostoxx 50 added 1.75% while the DOW put on 0.37% to retake 14,000 and the S&P up 0.63%.

• USDMYR opened in tune to a slightly lower level at 3.0950 today but still expecting a tight range trading at 3.0800-3.1100. In the short term I personally expect a little more upside on USDMYR and market could also be eyeing 3.1300 should we break 3.1100.

• AUDUSD gapped back up to 1.0350 levels where it was a couple weeks back as RBA signals better outlook and rate cuts are slightly diminishing. Market still seem to favour on sell on rallies which should pressure the pair down in short term. Sell on commodities isn’t helping the pair.

• More M&A news fed through the markets and the yanks couldn’t wait to get involved after their day off, with most of the move higher coming in the opening hour. More bickering over the sequestration, a slightly weaker NAHB index and still dire auto sales in Europe were largely ignored.

• Debt markets weren’t so sure with yields falling across Europe although only marginally. US notes held out for the most but have given up in the last 2 hours with yields rising 2.5bps to 2.026%.

• Oil was up 50c while gold is under pressure again and down $5 to $1605.

• The ZEW survey then showed increasing confidence over future growth, with the Euro Zone figure showing a 42.4 % surplus in the positive camp while in Germany the figure was 48.2%. Both figures are as bullish as they’ve been since mid 2010, although notably banks and insurance companies were net pessimists and the current situation index actually fell to 5.2 from 7.1, so we’re not out of the woods yet.