The US

The Dollar index gained 0.35% to 102.51 following mixed economic data. Report showed that the PCE inflation fell to 5.0% y/y in February 2023 from 5.3% in the prior month and marking the lowest level since September 2021. At the same time, personal spending gained 0.2% m/m (cons.: 0.3% m/m) while personal income rose 0.3% m/m (cons.: 0.2% m/m). Core PCE meanwhile remained elevated at 4.6%, suggesting a still healthy consumer spending especially in the services sector.

This week, the focus will be on labour market data where the US economy is expected to add 238k jobs in March, lower than 311k jobs in February 2023, and job openings are anticipated to be lower at 10.4 million in February 2023 from 10.8 million in the prior month.

US Equities & Sovereign Bonds

Wall Street closed on positive note as the Dow Jones rose 1.26% to 33,274, S&P500 gained 1.44% to 4,109, and Nasdaq climbed 1.74% to 12,222.

The UST10Y benchmark yield lost 8 bps to 3.468% and the UST2Y lost 9 bps to 4.025%, narrowing the inverted differential to 55 bps.

Eurozone

As the dollar climbed, the Euro fell 0.61% to 1.084. Preliminary report showed that the headline inflation rate in the Eurozone fell to 6.9% y/y in March 2023, down from 8.5% y/y in the previous reading (cons.: 7.1% y/y). However, excluding energy and food prices, core inflation rate hit a new high on record at 5.7% y/y from 5.6% y/y, signalling inflation-fighting narrative is likely to persist and putting pressure on policymakers in balancing price stability and financial market stability.

The UK

The British Pound shed 0.40% to 1.234. The UK’s GDP growth rate was revised higher to 0.1% q/q growth from a stagnant 0.0% q/q, which translates into a higher annual growth of 0.6% y/y from 0.4% y/y preliminary and narrowly avoided recession. Private consumption grew higher but outweighed by falling business investment.

Japan

The Japanese Yen weakened 0.12% to 132.86. Retail sales in Japan expanded 6.6% y/y in February 2023, faster than 5% growth in January and beating market expectations of 5.8% as domestic consumption continued to recover from pandemic.

China

The Yuan depreciated 0.05% to 6.874. Report by the official National Bureau of Statistics (NBS) showed that Manufacturing PMI in China declined to 51.9 in March 2023 from February’s 52.6 (cons.:51.5). This is the third straight month of expansion in factory activity, benefitting from the lifting of pandemic rules last year.

South Korea

The Won depreciated 0.20% to 1,301. On the macro front, the effects of elevated interest rates are transpiring as the industrial production in the country dropped 3.2% m/m (cons.: -0.5%), translating into annual contraction of 8.1% in February 2023, driven by slump in semiconductors and motors sub-segment.

Australia

The Aussie dollar fell 0.40% to 1.234. Market is currently split on whether the RBA would continue raising its interest rates or holding off at 3.60%. This is after the meeting minutes showing board members agreed to consider for a pause during the upcoming tomorrow’s meeting as the economic outlook is getting more uncertain recently, despite the inflation rate is still way above its target range of 2.0% - 3.0%.

Crude Oil

Oil prices traded higher as tight supply concerns remained in the market. Brent rose 0.63% to US$79 per barrel and WTI climbed 1.75% to US$76 per barrel.

Gold

Gold fell 0.56% to US$1,969/oz as divergence between how the Fed and market are looking at Fed Funds rate continues.

Malaysia Highlights

The Ringgit appreciated 0.12% to 4.415. Malaysia managed to rake in a record RM170 billion worth of investment commitments from China from a total of 19 memoranda of understanding (MoU) sealed between firms in China and Malaysia.

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 fell 0.14% to 1,423. Detailed transactions showed that the foreign investors were the net buyers with RM59.6 million flow, offset by local institutions and retailers’ net selling flow of RM37.3 million and RM22.3 million, respectively.

Fixed Income

MGS benchmark yield for 5-year was flat at 3.540%, while 3-year +1.0bps to 3.360%, 7-year -1.0bps to 3.810%, and 10-year +1.0bps to 3.910%.

Source: AmInvest Research - 3 Apr 2023