The US

The Dollar index weakened by 0.44% to 103.26 ahead of the Federal Open Market Committee (FOMC) meeting conclusion later today. Despite recent financial turmoil and contagion fears, a survey of 519 investors by MLIV Pulse Bloomberg Survey shows that most participants see a still-strong US economy behind the recent market trading. The collapse of three US banks and efforts to rescue others have caused stocks and bond yields to drop recently, and bets on the Federal Reserve monetary tightening have been dialled back.

US Equities & Sovereign Bonds

Wall Street closed higher, where Dow Jones was up by 2.19% to 32,561 S&P500 was up by 2.20 to 4,003 and Nasdaq was up by 1.97% to 11,860. The UST10Y benchmark yield rose by 18 bps to 3.609% and the UST2Y increased by 33 bps to 4.166%, narrowing the inverted differential to 15 bps.

Eurozone

The Euro gained by 0.92% to 1.067. Germany's economy is expected to shrink in the 1Q2023 and underlying inflation could remain high, according to a monthly report by the Bundesbank, a stagflation scenario from this perspective.

The UK

The British pound gained by 0.36% to 1.222. The UK's manufacturing output rebounded in 1Q2023, reaching the highest level since early last year, according to a survey by Make UK and BDO. However, manufacturers are bracing for contraction as inflationary pressures continue, with expectations for a lower output balance of 32% in the next three months.

Japan

The Japanese Yen weakened by 0.50% to 132.51. Japanese Prime Minister Fumio Kishida has announced a new plan to promote the "free and open Indo-Pacific" framework during his visit to India. The plan includes a USD75 billion investment in infrastructure and economic assistance for countries in the "Global South", with the aim of strengthening ties with developing nations in Asia, Africa, and Latin America.

China

The Yuan gained by 0.11% to 6.879. China's overnight funding rate, which measures market liquidity, has surged to a two-year high due to increasing financing demand driven by the nation's rapidly rebounding real economy.

South Korea

The Won weakened by 0.57% to 1,311. South Korean exports decreased by 17.4% for the first 20 days of March, with a 36.2% drop in shipments to China, according to customs agency data.

Australia

The Aussie dollar was down by 0.42% to 0.667. The Reserve Bank of Australia (RBA) was considering a pause on rate hikes at its April policy meeting even before the recent global banking system volatility, according to the latest MPC meeting minutes. The board discussed raising the cash rate by 25 basis points to 3.60% but recognized that monetary policy was already restrictive and the economic outlook was uncertain.

Crude Oil

Oil prices gained, where Brent was up 3.22% to US$75 per barrel and WTI also rose 3.88% to US$69 per barrel.

Gold

Gold was down by 2.47% to US$1,940/oz, but still trading higher since mid-March due to events surrounding the US financial system.

Malaysia Highlights

The Ringgit closed stronger by 0.36% at 4.470 yesterday. Malaysia's trade and investment mission to South Korea has resulted in potential investments worth RM24 billion (USD5.7 billion) for Malaysia. Several companies, including SKC, POSCO Holdings, and LOTTE Fine Chemical have shown interest in investing in Malaysia. SKC is considering further investments in Malaysia's electric vehicle segment due to increasing global demand for lithium-ion batteries.

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 lost 0.37% to 1,407. Detailed transactions showed that the local institutions and foreign investors were the net buyer with RM11.5 million and RM9.5 million respectively. Local retailers were the net seller with RM21.0 million.

Fixed Income

MGS yield 3-year +2.0 bps to 3.420%, 5-year +2.0 bps to 3.520%, 7-year +1.0 bps to 3.840%, and 10-year +3.0 bps to 3.950%.

Source: AmInvest Research - 22 Mar 2023