The US

The Dollar index gained by 1.01% to 104.65. Based on latest probability, market now is split whether the Federal Open Market Committee (FOMC) will either make 25 bps rate hike or no rate hike at all in their meeting next week due to the recent developments in the financial market.

US Equities & Sovereign Bonds

Wall Street was mixed, where The Dow Jones was down by 0.87% to 31,875 S&P500 down by 0.70% to 3,892 while Nasdaq up by 0.05% to 11,434.

The UST10Y benchmark yield was down by 23 bps to 3.455% and the UST2Y fell by 36 bps to 3.887%, narrowing the inverted differential to 43 bps.

Eurozone

The Euro fell by 1.45% to 1.058. The European Central Bank (ECB) is considering a 50 bps rate hike as the Eurozone economy strengthens and banking sector turmoil subsides. This decision comes as inflation rates remain high, and investors have questioned the ECB's commitment to a rate hike after the recent collapse of Silicon Valley Bank (SVB) and Signature in the US caused uncertainty in global financial markets.

The UK

The British pound lost 0.83% to 1.206. The UK is facing the largest decrease in spending power in 70 years due to the rising cost of living, with household incomes expected to drop by 6% this year and next, according to the government's independent forecaster. The increase in energy and food bills caused by the pandemic and the conflict in Ukraine is putting pressure on household budgets, and inflation is currently in double digits.

Japan

The Japanese Yen gained 0.60% to 133.42. Minutes from the Bank of Japan's (BOJ) January meeting showed that policymakers discussed the possibility of making adjustments to its bond yield curve control, with one member stating that the bank should keep "various options in mind" regarding the future course of monetary policy. The board concluded that it was too early to withdraw ultra-loose monetary policy due to inflation not reaching the BOJ's 2% target.

China

The Yuan lost 0.48% to 6.906. China's economic activity improved in the first two months of 2023, with consumption and infrastructure investment driving recovery from pandemic disruption, despite challenges of weak global demand and a persistent downturn in the property sector. Industrial output in January-February was 2.4% higher than a year earlier, and retail sales in the same period rose 3.5% from a year before. This suggests hopes for an economic revival led by consumption as flagging global demand weakens Chinese exports.

South Korea

The Won gained by 0.47% to 1,304. South Korea's unemployment rate decreased by 0.3 ppts to 2.6% in February 2023 with the economy adding 312,000 positions from a year earlier. This is indicating that the labour market is holding up despite high interest rates and falling exports.

Australia

The Aussie Dollar Weakened by 0.94% to 0.662 Due to the Stronger US Dollar.

Crude Oil

Oil prices fell sharply due to concerns over ample crude supply and worries about the direction of the US economy. Brent fell 4.85% to US$74 per barrel and WTI also fell 5.22% to US$68 per barrel.

Gold

Gold Was Up by 0.77% to US$1,919/oz, Trading Higher Due to Flow Into the Safe Haven.

Malaysia Highlights

The Ringgit closed at 4.484 yesterday. During the Parliament session yesterday, Deputy Finance Minister said that Malaysia's banking institutions have minimal and limited exposure to the collapse of Silicon Valley Bank (SVB) in the US, based on the authorities' assessment. He also stated that the country's banking system remains competitive and resilient in its role as a financial intermediary.

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 4.520.

FBM KLCI

The FBM KLCI gained 0.72% to 1,404. Detailed transactions showed that the local institutions were the net buyer with RM106.0 million. Local retailers and foreign investors were the net seller with RM23.1 million and RM82.9 million respectively.

Fixed Income

MGS yield 3-year +2.5 bps to 3.430%, 5-year +4.0 bps to 3.535%, 7-year +4.0 bps to 3.810%, and 10-year +5.0 bps to 3.910%.

Source: AmInvest Research - 16 Mar 2023