The US

The Dollar index fell 0.27% to 101.64, its lowest level since May 2022 as investors await for more information to gauge recession potential. This includes the US 4Q2022 GDP, personal income and spending and Personal Consumption Expenditure (PCE) which will be released later this week.

US Equities & Sovereign Bonds

Wall Street traded mixed as earnings result disappointed investors. The Dow Jones inched higher by 0.03% to 33,744, S&P500 fell 0.02% to 4,016, while Nasdaq dropped 0.18% to 11,313.

The UST10Y benchmark yield lost 1.1bps to 3.442% and UST2Y fell 8.5bps to 4.125%, narrowing the inverted differential between the two to 68.3bps.

Eurozone

As the dollar eased, the Euro rose 0.27% to 1.092, extending its gains for the fifth consecutive sessions as market players take the hint of hawkish signs from recent ECB officials’ remarks. On another note, the business sentiment in the Germany rose to 90.2 in January 2023, up from 88.6 in the prior month and marked the best sentiment since June 2022. Easing supply chain and inflation coupled with improving economic outlook prompted businesses to be slightly less pessimistic on their business condition.

The UK

The British Pound inched higher by 0.58% to 1.240 despite mixed economic data, taking view from the dollar weakness. Factory gate prices of goods by UK manufacturers slowed to 14.7% y/y in December 2022, the slowest pace since March 2022 and slowing from 16.2% in the prior month.

Japan

The Yen appreciated by 0.45% to 129.59. Some government bonds are being excluded from the World Government Bond Index due to the BoJ purchases exercise in its effort to contain the yield cap. To be eligible for inclusion, bonds should have minimum outstanding of 500 billion yen excluding central bank holdings.

China

The Yuan Remained at 6.793 Due to the Week-long Lunar New Year Holiday.

South Korea

The Won Depreciated Slightly by 0.08% to 1,232.

Australia

The Aussie Dollar climbed 0.82% to 0.710. The inflation rate in Australia climbed to 7.8% y/y during the last quarter of 2022 from 7.3% in Q3 and hotter market forecast of 7.5%. It was the highest point since 1990, boosted by food prices, dwelling construction, and transportation fuel. This builds up the case for a 25bps rate hike during the upcoming 7th February 2023 meeting, as per market expectations.

Crude Oil

Oil prices were largely unchanged as Brent was at US$86 per barrel while WTI traded around US$80 per barrel. Data showed that the US crude inventories rose 0.53 million barrels last week, much less than what was market expecting at 0.97 million barrels. Investors’ concerns on demand destruction due to slowing global economy is weighed against tight supplies.

Gold

Gold gained 0.45% to US$1,946/oz, hovering around its highest level since April 2022 amidst dollar trending lower and grim economic outlook.

Malaysia Highlights

The ringgit resumed its bullish trend as it strengthened 0.54% to 4.262, a level last seen since April 2022 as dollar continued to lose its ground.

Against Other Currencies

The ringgit was weaker against the AUD and IDR, but stronger against EUR, GBP, JPY, CNY, SGD, THB, and PHP.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.220 and 4.230 while our resistance is pinned at 4.290 and 4.300.

FBM KLCI

The FBM KLCI edged lower marginally by 0.06% to 1,499. Detailed transactions showed that local institutions were the net buyers with RM86.4mil, offset by the local retailers and foreign investors with RM30.8mil and RM26.5mil, respectively.

Fixed Income

The benchmark MGS yield of 3Y +1.0bps to 3.330%, 5Y +2.5bps to 3.500%, while 7Y and 10Y remained at 3.00%, and 3.740%.

Rates

The IRS yield for the 3-year +1.0bps to 3.325%, 5-year -1.5bps to 3.430%, 7-year -1.5bps to 3.540%, and 10-year -1.5bps to 3.645%.

Source: AmInvest Research - 26 Jan 2023