The US

The Dollar index weakened by 0.67% to 102.43. Federal Reserve (Fed) Governor Philip Jefferson (voting member) stated that the Fed would aim to avoid causing more harm to the US economy while addressing high inflation. He also mentioned that the current inflation rate is too high, and the Federal Open Market Committee's (FOMC) goal is to bring it down to 2% as soon as possible, but it would take some time as some components of inflation have been persistent, such as services, excluding housing.

US Equities & Sovereign Bonds

Wall Street was mixed, where Dow Jones was up by 0.49% to 32,394, S&P500 was up by 0.01% to 3,971 while Nasdaq was down by 0.91% to 11,716.

The UST10Y benchmark yield was up by 4 bps to 3.570% and the UST2Y increased by 8 bps to 4.078%, widening the inverted differential to 51 bps.

Eurozone

The Euro gained by 0.79% to 1.085. S&P Global has lowered its growth forecast for the Eurozone in 2024 from 1.4% to 1.0%, citing the impact of persistent inflation, which may require the European Central Bank (ECB) to raise interest rates for a more extended period than expected. The rating agency also noted that a restrictive monetary policy may affect domestic demand, while interest rates may become positive in real terms in 2024.

The UK

The British Pound gained by 0.89% to 1.234. The Bank of England Governor Andrew Bailey mentioned that the recent financial market turmoil could potentially create obstacles for the UK economy. However, he noted that while there is evidence of some tightening credit conditions, there has not been any critical development in that respect.

Japan

The Japanese Yen weakened by 0.12% to 130.89. Japan's parliament has approved a record budget of JPY114.38 trillion (around USD870 billion) for FY2023, which aimed at strengthening defence capabilities and supporting the struggling economy. The budget includes a record JPY6.82 trillion allocation for defence spending, as Japan faces security threats from its neighbouring countries, particularly China, North Korea, and Russia.

China

The Yuan weakened by 0.13% to 6.876. During the China Development Forum in Beijing, Chinese Premier Li Qiang urged attendees at an international development forum to strengthen confidence and stabilize expectations to address risks and challenges facing the world economy. The premier noted that the current world economic development is facing multiple complicated shifts and called on all parties to take a broad and long-term view to tackle the challenges.

South Korea

The Won depreciated by 0.43% to 1,299. according to the Ministry of Economy and Finance, South Korea's 2024 approved budget will focus on enhancing national security, job creation, and improving fiscal soundness amid rising national debt. The country is expecting a budget of around KRW670 trillion (around USD524.0 billion) for next year, up 4.8% from this year's budget.

Australia

The Aussie dollar was up by 0.96% to 0.671. Australian retail sales grew 0.2% m/m in February 2023, slightly higher than the expected 0.1%, according to Australian Bureau of Statistics (ABS). Spending on food-related industries was the biggest contributor to the rise, while spending on household goods remained weak, and spending on clothing and department stores saw only modest rises. The data suggests that high inflation and interest rates are causing consumers to remain cautious about spending.

Crude Oil

Oil prices traded higher, where Brent was up by 4.88% to US$79 per barrel and WTI was also up by 5.61% to US$73 per barrel.

Gold

Gold was down by 0.24% to US$1,974/oz, but still trading higher this month amid uncertainty surrounding the US and the European banking sector.

Malaysia Highlights

The Ringgit closed stronger by 0.61% at 4.401 due to the weaker Dollar. The Bank Negara Malaysia’s 2022 Annual Report is expected to be published, where growth, inflation forecast and current development in the domestic economy and financial is expected to be addressed later today.

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 up by 0.67% to 1,409. Detailed transactions showed that the local institutions were the net seller with RM13.8 million. Local retailers and foreign investors were the net buyer with RM12.8 million and RM1.0 million respectively.

Fixed Income

MGS yield 3-year -1.0 bps to 3.349%, 5-year remained at 3.510%, 7-year +1.0 bps to 3.800%, and 10-year remained at 3.890%.

Source: AmInvest Research - 29 Mar 2023