The US

The dollar index gained by 0.28% to 103.92. On private consumption, the US retail sales grew sharply to 3.0% m/m in January 2023 (December 2022: -1.1% m/m). This is the largest gain in two years. Based on the numbers, more consumers were spending on vehicles, dining out, clothing and vehicle.

US Equities & Sovereign Bonds

Wall Street gained as the Dow Jones was up 0.28% to 34,128, S&P500 closed higher 1.40% to 4,148, and Nasdaq rose 3.01% to 12,071. The UST10Y benchmark yield was up 7 bps to 3.805% while the UST2Y added 11bps to 4.631%, widening the inverted differential to 83 bps.

Eurozone

The Euro gained 0.10% to 1.069. Economic activities in the Euro Area continued to remain sluggish, indicating uncertainty in 2023 to persist. Latest numbers show that the industrial production (IP) declined by 1.1% in December 2022.

The UK

The pound weakened 0.27% to 1.203. Inflation in the UK receded from 10.5% in December 2022 to 10.1% in January 2023. This will be the sixth month headline inflation in the UK remained above the double-digit threshold. Core inflation on the other hand, receded sharply from 6.3% in December 2022 to 5.8% in January 2023.

Japan

The Yen weakened 2.13% to 134.16. The Yen continued its weakening trends since early February 2023, as market anticipates the monetary policy normalisation from the incoming Bank of Japan (BoJ) governor.

China

The Yuan weakened 0.59% to 6.855. Focus today will be on the house price index, where the previous numbers showed house prices in China declined by 1.5% y/y and has been in the negative territory since May 2022.

South Korea

The Won weakened 1.40% to 1,282. South Korea’s import inflation slowed down from 9.1% in December 2022 to 1.7% in January 2023. Import inflation has been on a downward trend since May 2022, and this may improve the consumer inflation situation in South Korea.

Australia

The Aussie Dollar weakened 0.20% to 0.690. In a testimony before the Australian Senate yesterday, the Reserve Bank of Australia (RBA) Governor said that the Australian economy still has some chances of avoiding an economic recession and achieving a soft landing. According to his view, the situation in the labour market, especially wage growth will be the key determinant whether soft landing can be achieved. So far, wages grew by 3.1% in the 3Q22, the highest since 2013 as more employees were asking higher compensation.

Crude Oil

OPEC raised its global oil demand growth forecast for 2023 by 2.3 million barrel per day (bpd), which will reach 101.87 million bpd. This is primarily due to the reopening of China’s economy and supply cut in Russia. Despite this news, Brent was down 1.17% to US$85 per barrel and WTI down 1.42% to US$79 per barrel.

Gold

Gold Price Was Also Down by 1.58% to US$1,836/oz Due to the Stronger Dollar.

Malaysia Highlights

The ringgit depreciated 1.36% to 4.392. Economy Minister yesterday said that Malaysia will become a high-income nation as soon as 2026, if the economy grows by 4-5% from 2023 to 2025.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.390 and 4.400 while our resistance is pinned at 4.420 and 4.430.

FBM KLCI

The FBM KLCI was up by 0.92% to 1,488. Detailed transactions showed that the local institutions and local retails were the net sellers with RM53.1 million and RM50.1 million respectively. Foreign investors were net buyer of RM103.2 million.

Fixed Income

The MGS 3y increased by 0.5 bps to 3.437%, 5y +7.0 bps to 3.643%, 7y +1.0 bps to 3.797%, and 10y +2.0 bps to 3.902%.

Source: AmInvest Research - 16 Feb 2023