Market Update - 7 May 2013

• It seems market is more relieved than positive of the elections being over in Malaysia, yesterday USDMYR hit a low of 2.9650 before some pullback towards 2.9800. But overnight, we saw the MYR NDF traded back lower and this morning the local market followed suit and opened at 2.9650.

• KLCI closed at 1,752.02 yesterday but hit a high of 1,826.22 in the first half of the day before profit taking brought it back lower. I would expect some Malaysia markets strength in the coming days but like I mentioned yesterday I don’t expect this to be the story going forward, markets are never a one way story, I am expecting a pullback because 1) the sharp move in MYR assets happen too fast too much and 2) globally I reckon we could be heading for a correction. Its only my view and I could be wrong.

• The S&P 500 closed at another record high, pushing further above 1,600 as financial shares led the way after Bank of America's settlement with MBIA. Dow Jones industrial average dipped 5.07 points/0.03%, to 14,968.89 at the close. But the Standard & Poor's 500 Index inched up 3.08 points/0.19%, to finish at a record 1,617.50. The Nasdaq Composite Index gained 14.34 points/0.42%, to close at 3,392.97.

• The situation in Europe doesn’t seem to be improving and we could be in for a really long long drag out. German factory orders look set to contract in March following a strong 2.3% MoM increase in the previous month.

• Of course today’s focus will be on RBA’s rate decision, for those who know me, I keep a close eye on Australia. RBA is proactive central bank and although the data so far in 2013 has been ok, the past month’s Aussie data has been disappointing including yesterday’s weak retail sales number. It’s 50/50 today on the rate decision and I wouldn’t be surprised if they do cut. AUDUSD is on the backfoot and market is keen to sell on rallies on the pair with 1.0200 just lending it support.