The US

The DXY Dollar gained by 0.68% to 103.617 by end of the trading day. Latest labour market data showed that the US unemployment rate fell to 3.4% in January 2023, the lowest since May 1969. Furthermore, the US economy added 517K jobs in January 2023, surpassing market expectations. The job growth was led by gains in leisure & hospitality, professional & business services, and health care. This suggests the labour market is still tight despite laying offs in the tech sectors. Nonetheless, wage growth has been on a downward trend since last year.

US Equities & Sovereign Bonds

Wall Street closed lower on Monday. Dow Jones down by 0.10% to 33,891, S&P500 down by 0.61% to 4,111, and Nasdaq also down by 1.00% to 11,887.

The UST10Y benchmark yield was up by 11.530 bps to 3.640% and UST2Y rose 18.380 bps to 4.472%. The 10/2 spread remained inverted, widening to 83.25 bps.

Eurozone

The Euro lost by 0.64% to 1.073. Investor sentiment in the Eurozone improved in February 2023 to reach its highest level since March 2022 but remains negative according to the Sentix survey. The index rose to -8.0 points from -17.5 in January, exceeding analysts' expectations of -12.8.

The UK

The Sterling weakened by 0.31% to 1.202. The Bank of England’s policymaker Catherine Mann believes that there is a greater likelihood of the bank raising interest rates rather than cutting them. Mann, known for her hawkish views on monetary policy, is concerned about potential upward risks to the bank's inflation outlook.

Japan

The Yen weakened by 1.12% to 132.660. The Japanese government has reportedly approached The Bank of Japan Deputy Governor Masayoshi Amamiya as a potential successor for the current central bank governor Haruhiko Kuroda.

China

The Yuan gained by 0.02% to 6.796. China and Australia have held talks to improve their bilateral economic and trade relations after several years of strained relations. The Chinese Ministry of Commerce called the meeting with the Australian counterpart to improving the relationship between the two countries.

South Korea

The Won weakened 1.95% to 1,253.35. Growth prospect for South Korea is not looking great this year. The Korea Economic Research Institute has revised down their 2023 economic outlook from 1.9% to 1.5%. The downward revision was due to expected slower domestic demand due to higher interest rates, and sluggish exports performance.

Australia

The Aussie Dollar weakened 0.58% to 0.688. The Reserve Bank of Australia (RBA) is expected to raise its interest rates by 25bps to 3.35% today, based on consensus expectation. The decision will be based on a balance between weaker economic activities against a rise in core inflation.

Crude oil

The European Union and G7 have officially imposed sanctions on Russian oil products and set a price cap on these products. The sanctions ban imports of Russian oil products into the EU and the price cap sets a limit of USD100 per barrel of diesel and USD45 per barrel of fuel oil and other products. Brent up 1.84% to USD81.41 per barrel and WTI also up by 0.98% to USD74.11 per barrel.

Gold

Gold gained 0.13% to US$1,867/oz, trading lower since the decisions by major central banks last week.

Malaysia Highlights

The ringgit remained at 4.259 due to holiday yesterday. Malaysia’s GDP will be published on 10 February 2023 (Friday), where we expect growth to be between 6.5 – 7.0% in the 4Q2022 (3Q2022: 14.2% y/y). The slowdown is reflecting to the lower exports numbers and household spending in the 4Q2022.

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 4.250 and 4.260.

FBM KLCI

The FBM KLCI Remained at 1,490 Due to Holiday Yesterday.

Fixed Income

The benchmark yield MGS 3Y down 2.0bps to 3.330%, 5Y -2.0bps to 3.440%, 7Y +1.5bps to 3.665%, and 10Y -0.5bps to 3.765%.

Source: AmInvest Research - 7 Feb 2023