The US

The Dollar index fell 0.25% to 102.86 as investors’ worries over the financial system eased. The First Citizens BancShares stated that it will take on the deposits and loans of Silicon Valley Bank. Also earlier, the US authorities mull over expanding the emergency lending facility for banks, which would provide First Republic Bank, which had similar business model as SVB, the chance to prop up its balance sheet. This would further shore up investors’ confidence amidst the US banking crisis.

US Equities & Sovereign Bonds

Wall Street closed mixed as the Dow Jones rose 0.60% to 32,432, S&P500 climbed 0.16% to 3,978 while Nasdaq fell 0.47% to 11,769.

The UST10Y benchmark yield added 15 bps to 3.530% and the UST2Y added 23 bps to 3.995%, widening the inverted differential to 46 bps.

Eurozone

The Euro rose 0.35% to 1.080. European markets closed higher as investors were cautiously optimistic that there the end of banking volatility is nearing. The panEuropean Stoxx 60 climbed 1.1% higher after a sharp loss of 1.4% in Friday’s session.

On the data front, the business confidence indicator in Germany improved to 93.3 in March 2023, the highest since February 2022 and beating market forecasts of 91. Both manufacturing and services companies were more pleased with current business conditions despite the recent banking sector turmoil, high inflation, and elevated interest rates.

The UK

The British Pound gained 0.44% to 1.229. According to the CBI latest Distributive Trends Survey, the retail sales volume increased only slightly in March 2023 as the weighted balance narrowed to +1 from +2 in the prior month. This is much better than market expectation of -6 and may suggests that the UK economy is on a stronger footing.

Japan

The Japanese Yen weakened 0.64% to 131.57 after a report by the BoJ showed that the Japan’s business-to-business (B2B) services inflation climbed to 1.8% y/y in February 2023, from 1.6% y/y in the prior month. The pick-up in can be attributed to the rebound seen in tourism and rising labour costs, making the case for a targeted sustainable price increase of 2.0% through wage increases, with the inflation rate last spotted at 3.3% y/y in February 2023.

China

The Yuan weakened 0.21% to 6.882. For the first two months of 2023, profits earned by manufacturing firms tumbled 22.9% y/y to CNY887.2 billion as factory activities struggled to recover from the slump during pandemic times. The decline was driven mainly by lower profits in private sectors compared to the state-owned companies.

South Korea

The Won depreciated 0.62% to 1,301, partly erasing the gains made last week. The Ministry of Land, Infrastructure and Transport stated that the value of construction deals fell 18.4% y/y to 66.7 trillion Won (US$51 billion) in the last quarter of 2022 as interest rate hike cycle has dampened demand in property market and high inflation squeezed the margin among companies.

Australia

The Aussie dollar gained slightly by 0.09% to 0.665. Preliminary reading showed that the Australia Composite PMI fell into the contraction zone at 48.1 in March 2023 from 50.6 as both manufacturing and service sectors saw decline in output due to lower demand and softer economic conditions.

Crude Oil

Oil prices surged as banking optimism surfaced and further tight supplies in oil market was seen following a halt on oil exports from Iraq’s Kurdistan region. Brent surged 4.17% to US$78 per barrel while WTI climbed 5.05% to US$72 per barrel.

Gold

Gold Fell 1.09% to US$1,956/oz as Risk-on Mode Improved.

Malaysia Highlights

The Ringgit strengthened 0.14% to 4.422 and traded within the range of 4.421 and 4.433. The producer inflation saw the first contraction at 0.8% y/y since January 2021 as the high base effect is starting to materialize, coupled with lower commodity costs.

Ringgit Outlook for the Week

The support level for USD/MYR is seen at 4.400 and 4.410 while resistance is pinned at 4.430 and 4.440.

FBM KLCI

The FBM KLCI fell 0.22% to 1,397. Detailed transactions showed that the foreign investors were the net sellers with RM80.1 million, offset by the local institutions and retailers with RM39.2 million and RM40.9 million buying flow, respectively.

Fixed Income

The MGS benchmark yield 5-year +1.0 bps to 3.510%, while the 7-year -1.0bps to 3.789%. But the 3-year and 10-year yield were flat at 3.350% and 3.890%, respectively.

Source: AmInvest Research - 28 Mar 2023