Market Update - 26 July 2012

Central banks are digging deeper into their tool kits in search of innovative ways to unclog bank lending and keep a weakening world economy afloat. Policy makers from the Federal Reserve, the European Central Bank and the Bank of England all meet within 24 hours next week

Positive earnings results from Boeing and Caterpillar pushed the Dow higher (+0.47%), while general risk off sentiments continue to plague the rest of Wall Street with S&P and Nasdaq declining 0.03% and 0.31% respectively.

Bearish data was also seen overnight, with the UK GDP contracting by 0.8% yoy (expectation: -0.3%) while US new home sales saw a contraction of 8.4% mom (expectation: +0.7%).

Asia stocks rose snapping a four-day loss, as a drop in US new home sales fueled speculation in the Federal Reserve may take new steps to spur growth. Gains in shares were limited as Citigroup Inc. raised its bet for Greece’s exit from the euro to about 90 per cent

Selling pressures subsided slightly on Wednesday as the KLCI pulled back to gain some grounds during the session. Not like we are going to see any significant move in either direction, however, as market sentiment still hangs in balance amidst plenty of concerns stemming from the Eurozone.

Nomura Holdings Inc. CEO,  Kenichi Watanabe will step down as the firm  seeks to resolve an insider-trading scandal, the Nikkei reported, without saying where it got the information

Dorab Mistry compared the palm oil market in 1998 to the Titanic and correctly predicted a slump from then-record prices the next year. He is now forecasting another retreat as  weakening demand outweighs a decline in Malaysian palm oil production.

USD/MYR tried but failed to close within its daily uptrend channel yesterday as the later part of the   session saw a spike in the EUR/USD on ECB’s Nowotny’s comments about a banking license for the ESM. The dollar fell broadly and dragged USD/MYR lower.