What moved this week and what it means for expats in SE Asia
Markets, currencies, and macro events filtered through one lens: what does it mean for a European professional living in Malaysia, Singapore, or Thailand with assets spread across multiple jurisdictions?
American technology shares had their worst week since June, oil touched $110, and sterling had its strongest week in more than a month
The Nasdaq fell 4.48% and the S&P 500 1.95%, both their worst week since June, as doubts grew over how long the spending on artificial intelligence can last. Chip makers lost more than 11%. The Dow rose 0.67% as money moved into consumer staples and health care. American inflation came in above forecast at 3.7% for September, with petrol making up more than half the rise. Bets on a Fed rate rise on 28 October jumped after the figure, then fell back when Chair Kevin Warsh declined to give any signal. Markets still see a rise by December as close to certain.
Oil touched $110 a barrel on Friday for the first time since May, and Brent ended the week 5.2% higher at $109.86. Iranian attacks on shipping cut the oil moving through the Strait of Hormuz to about 11.6 million barrels a day, a third below normal. At least ten vessels were attacked in a single week, the most since the fighting began in February. Saudi Arabia intercepted a missile heading for its Yanbu export terminal, and shot down drones over Riyadh at the weekend. Iran repeated its offer to reopen the strait if America lifts its blockade and sanctions, the same offer President Trump rejected in September. When trading reopened on Monday morning in Asia, Brent eased about 0.7% to $108.89.
In Britain, the Budget is on Wednesday 28 October, nine days away and on the same day as the Fed's decision. No pension measures have been published. September's inflation figure arrives on Wednesday 21 October, with 3.4% expected. If it comes in at or below 3.9%, the state pension is on course to rise 3.9% next April. The ten-year gilt yield eased slightly to 5.38%, and markets still expect the Bank of England to raise rates on 5 November. The deadline for larger schemes to connect to pensions dashboards follows on 31 October.
Malaysia's economy grew 5.3% in the third quarter on the early estimate, down from 6.0% but above expectations. The ringgit firmed on the news and ended the week at about 4.08 to the dollar. Bank Negara next sets rates on 5 November, the same day as the Bank of England.
Currency rates relevant to European expats in SE Asia
As at Friday 16 October. Rates are indicative. Source: European Central Bank reference rates.
Currency context for this week
Sterling had its strongest week in more than a month. It rose 0.87% against the dollar to 1.3335 and gained between 0.5% and 0.8% against the ringgit, the Singapore dollar and the baht. The euro rose 0.42% against the dollar to 1.1253, ending five weekly falls, but sterling gained on it for a third week.
The ringgit barely moved against the dollar, again. It has stayed between 4.07 and 4.09 since 11 September, through a Fed rate rise, a global bond selloff and this week's fall in technology shares. The swings in what a European salary buys in Kuala Lumpur keep coming from the home currency. Since mid-September a euro buys about 2.7% fewer ringgit and a pound about 1% fewer, even after this week's recovery. For costs that will be paid in ringgit, what matters is how much is already held in ringgit.
What this week's moves mean for your portfolio
The Nasdaq fell 4.48% and chip makers more than 11%, while the Dow rose and Hong Kong barely moved. Japan's Nikkei fell 5.4% on the same worries about technology. An expat whose pension, workplace shares and personal account all lean on the same American technology names took this week's fall three times. A portfolio spread across regions and sectors took a smaller share of it.
Government bonds rose as shares fell, and the American ten-year yield dropped from 5.24% to 5.09%. In Britain the ten-year gilt eased to 5.38% and the thirty-year to 5.85%, still close to their highest since 2007 and 1998. Higher gilt yields mean lower defined benefit transfer values. With the Budget on 28 October and a likely Bank of England rise on 5 November, anyone weighing a transfer should work from current figures rather than try to time the decision.
Gold slipped 0.7% to $4,166, in a week oil rose 5% and the Gulf escalated. It is still about 26% below its January high. This year it has followed the dollar and interest rates, not the war. That is the case for building the core of a portfolio from Irish-domiciled accumulating UCITS funds, spread across markets and held in the currency the money will be spent in.
Connect market moves to your specific situation
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