The US

The Dollar index rose 0.48% to 104.98, following the release of labour market data which continued to support for higher fed funds rate. According to a weekly report, the number of Americans filing for unemployment benefit fell further to 190k last week from 192k from the previous week and beating market expectation of 195k. Another report also showed that the unit labour costs growth in the final quarter of 2022 was revised higher to 3.2% q/q from initial estimate of 1.0% gain, significantly above the consensus forecast of 1.6% q/q growth.

The Atlanta Fed President Raphael Bostic saying that the impact from the Fed’s cumulative rate hikes earlier may only surface now. On the other hand, Fed Governor Christopher Waller stated that if upcoming data is showing the economy is moderating and inflation is slowing, then he would prefer the Fed Funds to peak around the same as the December’s projection, which is around 5.1% - 5.4%.

US Equities & Sovereign Bonds

Wall Street to close higher as the Dow Jones rose 1.1% to 33,004, S&P500 climbed 0.76% to 3,810 and Nasdaq gained 0.73% to 11,463.

The UST10Y benchmark yield added 6 bps to 4.056% and the UST2Y increased 1 bps to 4.885%, narrowing the inverted differential to 83 bps.

Eurozone

Due to the stronger Dollar, the Euro dipped 0.67% to 1.060 despite the higher than expected Euro Area inflation. Consumers price in the bloc grew 8.5% y/y, slightly slower than 8.6% y/y in the prior month but much faster than what market had expected (8.2% y/y). It was driven by higher inflation in food component, nonenergy industrial goods, and services. Core inflation rose to fresh record high of 5.6% y/y, from 5.2% y/y. This shows that the inflation threat is still alarming and may cause the ECB to continue to stay hawkish.

The UK

The UK Sterling shed 0.69% to 1.195. The UK’s economy is facing a series of strike this month with unions calling for wage rises to catch up with the surging inflation.

Japan

Similarly, the Japanese Yen depreciated 0.43% to 136.77. One of the board members at the BoJ Hajime Takata said the central bank must be aware and be ready to curb the side effects of decades of easy monetary policy. But he maintained the same tone as the upcoming Governor Kazuo Ueda that there is no need for an immediate pivot following the higher inflation. According to the Bloomberg, market is now expecting the changes in monetary policy to happen by June 2023. On the data front, the consumer confidence marginally improved to 31.1 in February 2023 from 31.0.

China

The Yuan also declined by 0.68% to 6.917 as the dollar strengthened. China’s government is planning to inject US$1.9 billion into the biggest memory chip maker in China, Yangtze Memory Technologies Co. as the industry is struggling due to the sanction by the US and slowing global demand.

South Korea

The Won appreciated slightly by 0.03% to 1,315. The S&P Global Manufacturing PMI report showed that manufacturers in South Korea is still facing a decline in growth in February 2023. The headline reading was unchanged at 48.5, the same as January’s reading. It has stayed under the growth threshold of 50 for the eighth consecutive months as export sales, new orders, and output continued to fall amidst uncertainty in global economic condition.

Australia

The Aussie Dollar fell 0.46% to 0.673. Housing approval in Australia declined sharply by 27.6% m/m in January 20023 after a 15.3% y/y increase in the prior month as elevated interest rates are dampening housing growth.

Crude Oil

Brent Rose 0.04% to US$84 Per Barrel While WTI Climbed 0.60% to US$78 Per Barrel

Gold

Gold Fell 0.05% to US$1,835/oz.

Malaysia Highlights

The Ringgit depreciated 0.07% to 4.476. The Amazon Web Services (AWS) is committed to invest RM25.5 billion worth of cloud computing infrastructure investment into Malaysia by 2037. This could accelerate digitalization and digital transformation to propel Malaysia to become the Southeast Asia’s data centre and digital hub.

Ringgit Outlook for the Week

We expect the MYR to trade between support level of 4.450 and 4.460 while resistance is pinned at 4.500 and 4.510.

FBM KLCI

The FBM KLCI rose 0.36% to 1,455. Detailed transactions showed that the local institutions and retailers were the net buyers with RM31.4 million and RM42.4 million, respectively. Local institutions were the net sellers with RM73.8 million outflow.

Source: AmInvest Research - 3 Mar 2023