Sean Lim Tze Khang | (603) 2168 1100 | [email protected]
Shakiness in the Dow
25 May 2009
Dow inches closer to short-term MAV line
Composite Index :
+9.70pts +0.9% (1,045.3)
The Dow declined 315pts from its intraweek high to close at 8277 last Friday, largely due to
market jitters over General Motor’s impending bankruptcy. GM borrowed $4bn from the US
government, $1.4bn more than expected to bring its total bailout money to $19.4bn, but still
expects to file for bankruptcy by June 1. GM’s bondholders have until May 26 to accept the
company’s offer to swap equity for $27bn of bondholder claims (source: Bloomberg).
Friday : 1st Day Up
Hot Indicators
Friday : Dow Jones Index
-14.81pts -0.2% (8,277.3)
Friday : Shanghai Index
-13.02pts -0.5% (2,597.6)
Friday : Hang Seng Index
-136.97pts -0.8% (17,062.5)
Friday : Nikkei
-38.34pts -0.4% (9,225.8)
Dow: Close to
30-day MAV line
Friday : FTSE
+19.82pts +0.5% (4,365.3)
Current : Japan Yen Carry Trade
USD-JPY : +0.37pts +0.4% (94.8)
Hot Commodities
WTI Oil Prices : 61.67 (+0.62)
Crude Palm Oil : 2,521.00 (+22.00)
Soybean Oil : 38.10 (+0.12)
US Fed Funds Rate
Current : 0.25%
VIX rising
Rate Cut/ Increase :
Probability :
No Change : 0.25%
49.5%
(-) 25bps to 0.00%
35.6%
Dow Jones, VIX Index (source: Bloomberg)
Next Fed Meeting :
25 Jun 2009
VIX rising, cautious Outlook
Traders have turned increasingly cautious ahead of the long weekend in the US. The Dow
is close to testing the 30-day MAV support line while the VIX index has been rising over the
last three consecutive days, signalling a rise in uncertainty in the market place. The US
markets are closed on Monday and will resume trading on Tuesday.
Strategy: Stay on sidelines, wait for US markets to reopen
Asian markets were also flat last week ahead of the long weekend in the US and we expect
trading to be similarly bearish today and tomorrow until the US markets reopen and provide
us with some indication. Until then, traders are advised to remain on the sidelines.
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What’s Next :
•
•
•
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May 26
May 26
May 27
May 27
: Msia Overnight Rate
: US Consumer Confidence
: Msia GDP
: US Existing Home Sales
April 09 Malaysia CPI yoy up 3% to 111.5
(March yoy +3.5%) less than forecast of
+3.2%. Malaysia Overnight Rate and US
Consumer Confidence are due to release
tomorrow. Watch out for Malaysian GDP
and US Existing Home Sales reports on this
Wednesday
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1. As of 25 May 2009, Hong Leong Investment Bank Berhad has proprietary interest in the following
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(a) -.
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Equity rating definitions
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Positive recommendation of stock under coverage. Expected absolute return of +15% over 12-months, with low
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Situational or arbitrage trading opportunity.
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