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Decided to make adjustments on the way I blog & share due to time constraints and other commitments. In the coming weeks you should see them. Short updates but more frequent & concise.

Thursday, September 24, 2015

Weekly Market Highlights September (2)

Source: Amp Capital (here for full market update) & iCapital biz (subscription required)

It was another volatile week for global shares with strength into the Fed meeting, partly in anticipation of the Fed leaving interest rates on hold, and then European and US shares completely reversing their gains as the Fed provided a reminder about China and emerging market driven global growth worries.

At the very least share markets remain vulnerable to more volatility over the next month or so as we are still in a seasonally weak period of the year for shares and uncertainties regarding China and the emerging world remain. A failure to resolve the US budget impasse by October 1 could also add to volatility.

United States
US economic data remains mixed and suggests that growth is continuing to trend along around 2-2.5%

Uncertainty about Chinese and emerging market growth along with continued uncertainty about US inflation has clearly got in the way and the Fed has rightly opted to leave rates on hold

While the Fed is likely to be comfortable that it has seen enough improvement regarding the jobs market it still seems to lack “confidence that inflation will move back to its 2% objective over the medium term.”

Get ready for some noise out of Washington. The US budget and debt ceiling may hit the headlines again soon with Congress needed to pass budget funding for the new fiscal year that begins on October 1.

Eurozone industrial production and construction activity was a bit stronger than expected in July, but inflation for August fell to 0.1% yoy and core inflation fell to 0.9% yoy, both of which are well below target.

The latest Greek election has been non-event for global investment markets. The election has seen Syriza win the largest share of votes, and it looks on track to form a coalition with the same party it has governed with since the January election. 

Eurozone business conditions PMIs (Wednesday) are likely to remain solid and bank lending growth (Friday) should show further signs of gradual improvement. The focus will also be on the Catalonian regional election (Sunday Sept 27), but with the polls showing Catalonians preferring to remain in Spain it hopefully won't be an issue for markets.

Average Chinese property prices continued to rise in August with more cities now seeing gains. Chinese property related risks are continuing to recede.

In China, the focus will be on whether Caixin/Markit manufacturing conditions PMI for September has continued to deteriorate or more likely shows signs of stabilisation and bottoming as has been evident in some other recent economic data.

Japan will see the release of its manufacturing conditions PMI (Wednesday) and inflation data Friday, with the latter likely to weaken thanks to lower energy prices taking inflation further away from the BoJ's 2% target.

**Repeat "again" with tiny modifications**
Share markets are likely to see more volatility in the next month or two. We are still in a seasonally weak period of the year for shares (Sept and Oct), uncertainties regarding China and the emerging world are likely to intensify in the short term, posing risks for global growth and the uncertainty around US Fed moves. 

Closer to home, same old story. I've been talking it over many past weeks:
Aug 22: Alarming Figures of Malaysia's Debt Problem
Aug 16: Stuck in the Middle of Nowhere
Aug 8: Weekly Market Highlights August (1) - Special Malaysia Highlights
Aug 5: The Risk of Holding Ringgit is Skyrocketing, WTB Donations
July 26: Sunday Lite: Flip Flop In Malaysia's Property Market

Aug 8 post has a section on What You Can Do with your MYR. I'm inclined to say that our financial woes will continue until we get more clarity on our 2016 Budget coming October. That's still a month ahead and likely not that any good news will come out. I also heard some rumors about GST but I cannot share - later kena charge for false information :)

So much for last week's recovery. 1.00 USD = 4.37012 MYR. Next week I will educate and talk more about major Economic Indicators.

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