The US

The Dollar weakened by 0.48% to 104.52. Federal Reserve Bank of San Francisco President Mary Daly (non-voting member) has stated that policymakers will need to raise interest rates to tackle the high inflation levels and keep them at elevated levels for an extended period of time. Daly also explained that inflation remains high in all sectors, and further policy tightening will be necessary to move past this episode of high inflation.

US equities & sovereign bonds

Wall Street closed higher with the Dow Jones rose 1.17% to 33,391, S&P500 climbed 1.61% to 4,046 and Nasdaq gained by 1.97% to 11,689.

The UST10Y benchmark yield was down by 10 bps to 3.952% and the UST2Y also fell by 3 bps to 4.857%, widening the inverted differential to 90 bps.

Eurozone

The Euro gained 0.36% to 1.064 due to the stronger Dollar. The latest Composite PMI for the Eurozone climbed to 52.0 in February 2023 (January 2023: 50.3), continuing its expansionary trend since the beginning of the year, with growth supported in the services industry.

The UK

The UK Sterling gained 0.75% to 1.204. The Bank of England Chief Economist Huw Pill has said that the UK economy has performed slightly better than expected over the past month and wage growth has been stronger than anticipated, suggesting that concerns centres more on the higher demand than will lead to sustained high inflation.

Japan

The Japanese Yen gained 0.66% to 136.87. Japanese companies increased their spending on plant and equipment for the seventh consecutive quarter, according to data released on Thursday by the Ministry of Finance. The increase in capital expenditure by Japanese firms in October-December 2022, which was slower than the previous quarter's gain, offers some relief to policymakers who are relying on private demand for a recovery from the pandemic.

China

The Yuan also gained by 0.18% to 6.904. China has set a growth target of approximately 5.0% for 2023, along with a goal of 3.0% for the consumer inflation and a 5.5% unemployment rate for urban residents. The target also includes the creation of around 12 million new urban jobs, which is higher than last year's target. These goals were stated in Premier Li Keqiang's government work report released on Sunday.

South Korea

The Won appreciated by 1.06% to 1,301. South Korea's semiconductor inventory increased by 28% in January, the largest monthly rise since February 1996. This indicates a prolonged tech slump that is negatively affecting the country's economic growth.

Australia

The Aussie Dollar gained 0.59% to 0.677. In January, approvals to build new homes in Australia fell by the largest amount ever recorded, according to the Australian Bureau of Statistics. This was led by a 13.8% drop in permits for private sector houses, marking the fifth consecutive month of declines and the lowest level since June 2012. This data suggests that weak residential property investment will continue to weigh on the Australian economy.

Crude oil

Brent rose 1.27% to US$86 per barrel and WTI was up by 1.94% to US$80 per barrel

Gold

Gold was up by 1.12% to US$1,856/oz due to weaker Dollar.

Malaysia Highlights

The Ringgit depreciated 0.04% to 4.477. Focus this week will be on the OPR decision on Thursday, where we are looking the rate to be maintained at 2.75%, in line with consensus.

Ringgit outlook for the week

We expect the MYR to trade between support level of 4.460 and 4.470 while resistance is pinned at 4.500 and 4.510.

FBM KLCI

The FBM KLCI fell by 0.13% to 1,454. Detailed transactions showed that the local institutions were the net buyer with RM168.9 million. Local retailers and foreign investors were the net sellers with RM157.9 million and RM11.0 million respectively.

Source: AmInvest Research - 6 Mar 2023