The US

The Dollar index weakened by 0.68% to 103.71. Focus this week will be on the Federal Open Market Committee (FOMC) decisions, where the market is expecting a 25 bps rate hike to be made this Thursday Malaysia’s time. Focus will also be on the Summary of Economic Projections to see the members' forecast on economy and prices, especially after the failure of several regional banks in the past two weeks.

US equities & sovereign bonds

Wall Street was closed in the red, where The Dow Jones fell by 1.19% to 31,862 S&P500 fell by 1.10% to 3,917 and Nasdaq declined by 0.74% to 11,631.

The UST10Y benchmark yield lost 15 bps to 3.429% and the UST2Y fell 32 bps to 3.837%, narrowing the inverted differential to 17 bps.

Eurozone

The Euro gained by 0.57% to 1.067. The European Central Bank (ECB) has announced a rate hike of 50 bps last week, amid recent turmoil in the banking sector and rising inflation across the 20-member region. The ECB has also indicated its readiness to supply liquidity to banks if needed.

The UK

The British pound gained by 0.53% to 1.217. The Bank of England (BOE) will also be facing a big decision on whether to raise interest rates as the base rate stands at 4.00%.

Japan

The Japanese Yen gained by 1.41% to 131.85. Germany and Japan have agreed to cooperate on economic security during their first high-level government consultations. German Chancellor and six ministers visited Japan to explore ways to reduce Germany's dependence on Chinese raw materials. The talks were held amid tensions over global supply chains and economic disruptions caused by the war in Ukraine and the COVID-19 pandemic.

China

The Yuan gained by 0.16% to 6.887. The People’s Bank of China (PBOC) has unexpectedly cut the reserve requirement ratio for almost all banks by 25 basis points effective 27 March. This move is an effort to maintain reasonable and sufficient liquidity in the banking system and prop up the economy. The decision comes after a week of financial market turmoil triggered by the failure of some regional US banks.

South Korea

The Won gained by 0.70% to 1,304. South Korea plans to build a massive semiconductor facility in the greater Seoul area with an investment of about USD230 billion from Samsung Electronics. The plans were announced by President Yoon Suk Yeol, who stated that the facility will be the world's largest new high-tech system semiconductor cluster.

Australia

The Aussie dollar gained by 0.62% to 0.670. Australia's economy added 65,000 jobs in February, and the unemployment rate dropped to 3.5 (January 2023: 3.7%). However, the Australian Bureau of Statistics cautioned that labour market figures could fluctuate, and January's increase in the jobless rate masked a larger-than usual rise in the number of unemployed people with future job prospects.

Crude oil

Oil prices dropped, where Brent fell 2.32% to US$73 per barrel and WTI also fell 2.36% to US$69 per barrel.

Gold

Gold was up by 3.63% to US$1,989/oz, trading higher amid uncertainties surrounding the US financial system.

Malaysia Highlights

The Ringgit closed stronger by 0.37% at 4.487 yesterday. Malaysia's International Trade and Industry Ministry (MITI) has secured potential investments worth RM24 billion and potential exports worth RM4.24 billion from its recent trade and investment mission to South Korea. The mission, led by International Trade and Industry Minister, aimed to attract quality investments and increase local companies' participation in higher value global supply chains.

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 1.45% to 1,412. Detailed transactions showed that the local institutions were the net buyers with RM187.7 million. Local retailers and foreign investors were the net sellers with RM97.4 million and RM90.3 million, respectively.

Fixed Income

MGS yield 3-year +2.0 bps to 3.470%, 5-year +2.5 bps to 3.580%, 7-year +2.0 bps to 3.840%, and 10-year +2.0 bps to 3.940%.

Source: AmInvest Research - 20 Mar 2023