The US

The dollar index lost 0.51% to 104.67. The Federal Open Market Committee (FOMC) member Philip Jefferson (voting member) earlier dismissed the idea of raising the 2.0% inflation target, saying that doing so will damage the Federal Reserve’s credibility.

US Equities & Sovereign Bonds

Wall Street closed higher as the Dow Jones was up 0.22% to 32,889, S&P500 gained 0.31% to 3,982 and Nasdaq closed 0.63% higher to 11,467.

The UST10Y benchmark yield was down by 3 bps to 3.914% and the UST2Y was also down 4 bps to 4.778%, widening the inverted differential to 86 bps.

Eurozone

The Euro gained 0.58% to 1.061. The Euro Area's consumer confidence inflation expectations index decreased from 17.8 in December 2022 to 17.7 in January 2023. This is the lowest reading since January 2021, suggesting inflation pressure is easing.

The UK

The UK Sterling gained 1.00% to 1.206. A recent survey by the Boston Consulting Group found that over 60% of British business leaders are optimistic about the country's economic growth in the next few years, with 61% of the respondents are expecting the business condition will be better by 2025.

Japan

The Yen gained 0.21% to 136.19. The incoming Governor of the Bank of Japan (BOJ) stated that the country's inflation needs to increase significantly for the central bank to consider tightening monetary policy. He also noted that the recent increase in Japan's inflation is due to cost-push factors rather than demand-pull, which justifies the maintenance of ultra-loose policy by the BOJ.

China

The Yuan gained 0.23% to 6.944. The People’s Bank of China (PBOC) released its quarterly policy implementation report stating that China's economy is expected to rebound in 2023 and will use forceful monetary policy to support domestic demand expansion, stabilize economic growth and prices.

South Korea

The Won weakened 1.43% to 1,323. Retail sales in South Korea increased by 4.0% y/y in January, but offline retailers experienced a decline in sales due to the New Year's holiday and an economic slowdown. Online platforms, however, saw a strong demand with a 9.1% y/y increase in sales, contributing to the overall growth.

Australia

The Aussie Dollar gained 0.19% to 0.674. The Reserve Bank of Australia's (RBA) expectation of further interest rate hikes has led the market predicting a higher chance of recession in the next 12 months. The probability has increased when the RBA signalled a rate pause few months ago.

Crude Oil

Brent was down by 0.85% to US$82 per barrel and WTI also declined 0.84% to US$76 per barrel, due to the market’s ongoing pessimism on growth outlook.

Gold

Gold Gained 0.34% to US$1,817/oz Due to the Weaker US Dollar.

Malaysia Highlights

The ringgit weakened by 0.34% to 4.478. On a macro front, producer prices in Malaysia slowed down from 3.5% y/y in December 2022 to 1.3% y/y in January 2023. The decrease is due to slower price growth in the manufacturing sector and mining and quarrying. However, costs for electricity and gas supply increased. On a monthly basis, producer prices fell by 0.8% m/m in January 2023. This marks the lowest producer inflation rate since February 2020.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.420 and 4.440 while our resistance is pinned at 4.450 and 4.500.

FBM KLCI

The FBM KLCI fell 0.09% to 1,456. Detailed transactions showed that the local institutions and local retails were the net buyers with RM132.1 million and RM46.5 million respectively. Foreign investors were net seller at RM178.6 million.

Source: AmInvest Research - 28 Feb 2023