The US

The Dollar index weakened by 0.48% to 102.14. The Core PCE which is the Federal Reserve’s (Fed) main indicator of measuring inflation is expected to remain at 4.7% based on Bloomberg’s consensus. This continues to pose a challenge for the Fed in balancing between price stability and financial market stability given issues surrounding the banking system in the US in past three weeks.

US Equities & Sovereign Bonds

Wall Street closed higher, where Dow Jones was up by 0.43% to 32,859, S&P500 was up by 0.57% to 4,051 and Nasdaq was up by 0.73% to 12,013.

The UST10Y benchmark yield was down by 2 bps to 3.549% and the UST2Y increased by 2 bps to 4.120%, widening the inverted differential to 57 bps.

Eurozone

The Euro gained by 0.56% to 1.091 due to the weaker US Dollar. Germany’s inflation fell less than expected in March at 7.8% compared to consensus forecast of 7.5%. Despite a large drop in energy prices, this curbed hopes for a rapid easing of wider price pressures across the Eurozone.

The UK

The British Pound gained by 0.58% to 1.239. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is expected to allow the UK to join the free trade bloc, making it the first non-founding member of the group. The CPTPP's 11 member states are set to approve the UK's accession in an online ministerial meeting on Friday, with further processes to formalize the entry to follow.

Japan

The Japanese Yen gained by 0.12% to 132.70. Japan is facing an anticipated shortage of over 11 million workers by 2040, according to a study by the independent think tank Recruit Works Institute. The study highlights the economic challenges that Japan is facing as its population continues to age rapidly, with the working age population expected to decline significantly from 2027.

China

The Yuan gained by 0.28% to 6.871. China's Premier Li Qiang has stated that the country's economic growth is displaying "strong momentum," despite a difficult global environment. He promised that the government will offer support to businesses as the nation recovers from strict Covid-19 controls that had a negative impact on GDP.

South Korea

The Won appreciated by 0.34% to 1,299. South Korea's parliament has passed a bill aimed at boosting the country's semiconductor industry by providing tax breaks to encourage investment. The bill, known as the "K-Chips Act" will increase the tax credit for major companies investing in manufacturing facilities from 8% to 15%, while smaller and medium-sized firms will see the tax break rise from 16% to 25%.

Australia

The Aussie dollar was up by 0.42% to 0.671. The RBA is scheduled to meet next week, where consensus is expecting the interest rates to be increased by 25 bps to 3.60%, as the labour market is tight and latest inflation stood at 7.8%.

Crude Oil

Oil prices traded higher, where Brent was up by 1.26 to US$79 per barrel and WTI was also up by 1.92% to US$74 per barrel.

Gold

Gold Was Up by 0.80% to US$1,980/oz, the Highest Level Over the Past Two Weeks.

Malaysia Highlights

The Ringgit weakened by 0.05% at 4.421. Malaysian government has announced plans to focus on economic reforms to move towards a higher value chain and become one of the preferred investment destinations in Asia. The Economy Ministry stated that the aim is to enhance growth and productivity in all sectors, with a focus on strategic sectors that can attract new investments, such as hightech industries that prioritize digitalization, including electrical and electronics, aerospace, and data centre industries.

Ringgit Outlook for the Week

The support level for USD/MYR is seen at 4.390 and 4.400 while resistance is pinned at 4.425 and 4.435.

FBM KLCI

The FBM KLCI was up by 0.30% to 1,425. Detailed transactions showed that the local institutions and local retails were the net seller with RM21.6 million and RM4.5 million respectively. Foreign investors were the net buyer with RM26.1 million.

Fixed Income

MGS yield 3-year +1.0 bps to 3.360%, 5-year +1.0 bps to 3.540%, 7-year +1.0 bps to 3.820%, and 10-year +1.0 bps 3.920%.

Source: AmInvest Research - 31 Mar 2023