• Wall Street rebounded.

Global Highlights

Dollar Index – The dollar weakened 0.25% to 104.435. St. Louis Fed’s President James Bullard pointed out the US economy would continue to grow in the coming months, thus easing fears of a recession.

US equities & sovereign bonds – Wall Street gained Dow Jones up 2.15% to 30,530, S&P 500 gained 2.45% to 3,765, and Nasdaq jumped 2.51% to 11,069. The differential between MGS10y and UST10y is 134.59bps, USDT10y and UST2y is 7.89bps. Where, the UST0y was at 3.275% and the UST2y was at 3.196%

Euro – The euro gained 0.21% to 1.053 as 25bps interest rates hike as expected. On a political note, French President rejected the PM’s resignation offer, iterating the government to “remain on task and act”. Also, Polish deputy PM resigns from his position in government.

British pound – The pound gained by 0.20% to 1.228.

Japanese yen – The yen lost by 1.11% to 136.570 from dollar strengthening. It is a concern as pointed out by the Finance Minister citing they will act appropriately if necessary.

Chinese yuan – The yuan gained 0.04% to 6.690. May’s retail sales declined by 26% y/y due to the zero-Covid policy implemented by the authorities. In Shanghai, retail sales declined by 37% y/y.

Korean won – The won depreciated 0.13% to 1,293.65. The Bank of Korea expects inflation will be higher than earlier projected and that it will closely assess debt repayment burdens to determine whether a half-percentage point interest rate hike in July is appropriate.

Australian dollar – The Aussie dollar up by 0.29% to 0.697. On monetary policy, the Reserve Bank of Australia governor Philip Lowe says rates are still very low given inflation is still high and the tight labour market. The governor open the idea for another 25-50bps rate hike in the upcoming meeting in August.

Commodities Highlights

Crude oil – Oil prices higher where Brent up 0.46% to US$114.65 per barrel and WTI up 0.99% to US$110.65 per barrel. Supplies remain tight due to Russian oil restrictions imposed after the country's invasion of Ukraine. Exxon Mobil Corp Chief Executive Darren Woods expects tight oil market to last for three to five years.

Gold – The gold price declined 0.31% to US$1,833/oz.

Malaysia Highlights

Malaysian ringgit – The ringgit gained 0.09% to 4.396 despite US dollar strengthening and yuan weakening. Following the ending of SST for cars, the government has announced the removal of the ceiling price for chicken and chicken eggs, as well as subsidies for cooking oil in bottles of 2kg, 3kg and 5kg, from 1 July. Such moves can be viewed positive, allowing market forces to work and the need to improve regulation to avoid unnecessary profiteering.

KLSE – The FBM KLCI gained by 1.15% to 1,458. Detailed transactions showed that local institutions and local retailers were net seller of RM125.3 mil and RM8.4 mil respectively. Foreign investors were net buyer of RM133.7 mil.

Fixed income – The MGS for 3-year was down -4.0bps to 3.550%, 5-year down -2.0bps to 3.900%, 7-year down 3.0bps to 4.300%, and 10-year remained at 4.360%.

Rates – The IRS yield for (3Y) was -1.0bps to 3.760%, (5Y) -1.0bps to 3.940%, (7Y) -3.5bps to 4.055%, and (10Y) -1.0bps to at 4.200%

Against major currencies – The ringgit was weaker against EUR, GBP, SGD and IDR, and gained against the AUD, JPY, CNY, THB, PHP and VND.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.4000 and 4.4100 while our resistance is pinned at 4.4200 and 4.4300.

Source: AmInvest Research - 22 Jun 2022