The US

The dollar index gained 0.39% to 104.59 as the market reacted to hawkish tone from the latest minutes by the Federal Open Market Committee (FOMC). The minutes showed that policymakers are open to the higher interest rates than the current projections. Some policymakers favoured higher quantum of interest rate hikes to keep inflation in check. Today’s focus will be on the GDP publication (final estimates), where market is expecting the US economy to cool down from 3.2% q/q in 3Q2022 to 2.8% in 4Q2022. This suggests the economic situation in the US is still strong.

US Equities & Sovereign Bonds

Dow Jones Down by 0.26% to 33,045, S&P500 Down 0.16% to 3,991, While Nasdaq Up 0.13% to 11,507.

The UST10Y benchmark yield down 4 bps to 3.916% and the UST2Y down 3 bps to 4.693%, and the inverted differential widened to 78 bps.

Eurozone

The Euro weakened 0.40% to 1.061, due to the stronger dollar. Focus today will be on the publication of CPI (final estimates), where market is expecting inflation to cool down from 9.2% in December 2022 to 8.5% in January 2023. Nevertheless, it is still well above the desired level, which may prompt the ECB to make further interest rates hikes.

The UK

The UK Sterling weakened 0.54% to 1.205. The UK Composite Purchasing Managers' Index (PMI) increased from 48.5 in January 2023 to 53.0 in February 2023, indicating growth in the economy for the first time since July 2022. This increase may lead the Bank of England (BOE) to raise interest rates further in March, despite some easing of price pressures in the PMI. Currently, the inflation rate in the UK is still above 10%.

Japan

The Yen gained 0.13% to 134.84. The monthly Reuters Tankan survey, which found that the sentiment index for manufacturers remained at -5 in February 2022, although slightly better than the previous month's reading of -6. However, the sentiment in the service sector decreased for a second consecutive month to +17, down from a three-year high of +25 in December 2022.

China

The Yuan weakened 0.19% to 6.893. China’s Premier Li Keqiang stated that China's economy is stabilizing and improving but is still facing challenges during a cabinet meeting on Wednesday. The authorities plan to take measures to enhance market expectations and strengthen economic growth momentum, including implementing tax and fee reductions to support the economy.

South Korea

The Won weakened by 0.71% to 1,305. The Bank of Korea interest rates decision will be announced today, where the market expects the interest rate to be maintained at 3.50%. Inflation is on a downward trend after peaking in July 2022 with reading as of January 2023 stood at 5.2%.

Australia

The Aussie Dollar weakened 0.72% to 0.680. Wages in Australia increased by 3.3% y/y, according to the Australian Bureau of Statistics. However, this still marks the largest decline in real wages ever recorded, since the inflation rate is at 7.8%.

Crude Oil

Oil prices trended downward since market is expecting more interest rate hikes from the Federal Reserve. Brent was down by 2.95% to US$81 per barrel, and WTI fell 3.16% to US$74 per barrel.

Gold

Gold Price Declined 0.53% to US$1,825/oz, Due to Expectation of a More Rate Hikes From the Fed.

Malaysia Highlights

The ringgit weakened 0.25% to 4.444. According to the Deputy Finance Minister, the upcoming Fiscal Responsibility Act is expected to be tabled this year, and will contain various measures, including capping the government's debt percentage at 65% of GDP and debt service charges at 15% of the annual budget.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.410 and 4.420 while our resistance is pinned at 4.450 and 4.460.

FBM KLCI

The FBM KLCI fell 0.68% to 1,464. Detailed transactions showed that the local institutions were the net seller with RM143.0 million. Local retailers and foreign investors were net buyer with RM94.8 million and RM48.2 million, respectively.

Source: AmInvest Research - 23 Feb 2023