The US

The Dollar gained by 1.21% to 105.62. The Federal Reserve Chair Jay Powell expressed that the central bank is ready to increase interest rates to combat inflation. This comes after a year-long campaign of monetary tightening that has struggled to cool down the US economy. Earlier, during appearance before Congress, Powell stated that recent economic data has been stronger than expected and that the ultimate level of interest rates is likely to be higher than previously anticipated.

US Equities & Sovereign Bonds

Wall Street closed lower with the Dow Jones was down by 1.72% to 32,856, S&P500 fell by 1.53% to 3,986 and Nasdaq also declined by 1.25% to 11,530.

The UST10Y benchmark yield was up by 1 bps to 3.964% and the UST2Y was also up by 12 bps to 5.008%, widening the inverted differential to 104 bps, the widest since the curve started to invert back in July 2022.

Eurozone

The Euro lost 1.24% to 1.055 due to the stronger Dollar. The latest ECB Consumer Expectation Survey showed that consumer inflation expectation for next 12 months have declined from 9.9% back in December 2022 to 9.5% in January 2023.

The UK

The UK Sterling lost 1.62% to 1.183. The Halifax house price index in February 2023 increased by 2.1% compared to the same period last year, maintaining the same pace as the preceding two months. The rise is attributed to lower mortgage rates, an increase in consumer confidence, and a robust labour market, which are all contributing to the sustained demand for housing.

Japan

The Japanese Yen was down by 0.90% to 137.16. Japan’s real wages growth declined by 4.1% in January 2023, the largest drop since 2014 and marks the tenth consecutive month of declining wages. This suggests that Japan has yet to achieve a virtuous economic cycle where wages and inflation are in balance. The drop was particularly pronounced for part-time workers, who experienced a slump in bonuses.

China

The Yuan traded lower by 0.50% to 6.966. China's exports fell by 6.8% in JanuaryFebruary 2023, marking the fourth consecutive period of decline due to weak global demand. This latest growth number adds to concerns about the impact of a global slowdown on China's economic recovery.

South Korea

The Won lost 0.24% to 1,300. South Korea's economy contracted by 0.4% q/q in the 4Q2022 (3Q2022: 0.3% q/q) according to revised data released by the central bank. Private consumption fell by 0.6%, while facilities and construction investments increased by 2.7% and 0.8% respectively. Exports declined by 4.6%, and imports dropped by 3.7%.

Australia

The Aussie Dollar lost 2.17% to 0.658. The Reserve Bank of Australia (RBA) has raised the cash rate by 25 bps to 3.60%, in line with market expectations. This was the 10th rate hike since May 2022, with a total increase of 350 basis points, the sharpest annual tightening since 1989. The RBA stated that inflation had peaked based on the monthly CPI indicator, but future rate hikes would depend on incoming economic data.

Crude Oil

Oil prices were down as market responded to Fed Chair’s hawkish statement. Brent down by 3.35% to US$83 per barrel and WTI also down by 3.58% to US$78 per barrel

Gold

Gold Lost 1.81% to US$1,813/oz Due to the Stronger Dollar.

Malaysia Highlights

The Ringgit gained 0.13% to 4.472. The Malaysian government has allocated half of the RM97 billion development expenditure in the revised Budget 2023 to the six poorest states in the country. These states include Kelantan (12.4%), Sarawak (9.0%), Kedah (8.4%), Perak (7.3%), and Terengganu (6.0%), according to the Economic Minister yesterday.

Ringgit Outlook for the Week

The support level for USD/MYR is seen at 4.460 and 4.470 while resistance is pinned at 4.500 and 4.510.

FBM KLCI

The FBM KLCI was up by 0.41% to 1,459. Detailed transactions showed that the local institutions were the net buyer with RM83.4million. Local retailers and foreign investors were the net sellers with RM4.4 million and RM79.0 million respectively.

Source: AmInvest Research - 8 Mar 2023