The US

The Dollar index fell 0.50% to 101.59 on softening US job data. Job openings, a signal for labour demand, dropped to slightly below 10 million at 9.9 million for the first time since May 2021, down from 10.5 million in January 2023 (cons.: 10.4 million). At the same time, factory orders fell 0.7% m/m in February 2023 after 2.1% m/m contraction during the previous month (cons.: -0.5%). Taken these together, it could suggest that the effect from cumulative rate hikes since last year is showing the desired outcome. Nonetheless, we believe more weakness need to transpire for the US Fed to tweak its present guidance which is mostly remains about inflation-fighting still.

US Equities & Sovereign Bonds

Wall Street closed in the red as the Dow Jones fell 0.59% to 33,402, S&P 500 fell 0.58% to 4,101 and Nasdaq shed 0.52% to 12,126.

The UST10Y benchmark yield lost 7 bps to 3.339% and the UST2Y lost 14 bps to 3.825%, narrowing the inverted differential to 49 bps.

Eurozone

The Euro rose 0.50% to 1.095. According to ECB’s survey, consumers trimmed their inflation expectation for 12 months ahead to 4.6% during February 2023 from 4.9% in the preceding month. Also, the inflation expectation for three years ahead fell to 2.4% from 2.5%. This was helped by easing energy prices combined with energy subsidies deployed by European government. Although, the recent oil production cut could re-fuel the upward pressure on inflation in the region.

The UK

The British Pound gained 0.70% to 1.250, the highest level since June 2022. The UK has joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trading bloc of 11 countries, three years after the country left European Union. The government stated that the deal may boost UK GDP by 0.8% over 10 years.

Japan

The Japanese Yen appreciated 0.57% to 131.71. The BoJ bought a record amount of 135 trillion yen ($1 trillion) in government bonds during fiscal year 2022 as it tried to contain the upward trending long-term interest rates amid global rate increases, according to the central bank’s statistics. As at end 2022, the BoJ owned more than 50% of outstanding Japanese government bond.

China

The Yuan depreciated slightly by 0.02% to 6.879. A report released by the PBoC stated that Chinese people are more willing to consume and invest in 1Q2023 and lesser people inclined to save their money. This is in line with the recovery progress made in China following the lifting of pandemic rules near the end of 2022.

South Korea

The Won appreciated 0.06% to 1,316. Inflation rate in South Korea eased to 4.2% y/y in March 2023, slower than 4.8% and beating market expectation of 4.3% y/y, an indication that the BoK could pause its rate hike cycle from now on as it tries to balance between fighting the inflation without damaging the economy too much. It marked the lowest inflation rate level since early 2022.

Australia

The Aussie dollar fell 0.52% to 0.675 after the local central bank decided to hold its interest rate. The RBA held the cash rate unchanged at 3.60% during its April meeting, marking the first pause since it started its rate hike cycle back in May 2022. The board members stated that it could give more time for the central bank to “assess” the economy first amidst heightened uncertainties.

Crude Oil

Oil prices was relatively steady after a volatile session as Brent closed the session at US$85 per barrel, a 0.01% increase from the previous session, and WTI rose slightly by 0.36% to US$81 per barrel. Investors weighed on the supply production cut against the weak US economic data.

Gold

Gold Rose 1.80% to US$2,020/oz as Easing US Economic Data Raises the Bet for US Fed Rate Cut.

Malaysia Highlights

The Ringgit appreciated 0.32% to 4.404 and traded within the range of 4.402 and 4.418. The Asian Development Bank (ADB) stated in its latest Asian Development Outlook that Malaysia is anticipated to book 4.7% growth in 2023 and 4.9% in 2024. This will be supported by the spill over effects from China’s reopening, government policy support and developments in the electronics industry.

Ringgit Outlook for the Week

The support level for USD/MYR is seen at 4.370 and 4.380 while resistance is pinned at 4.415 and 4.425.

FBM KLCI

The FBM KLCI fell 0.26% to 1,430. Detailed transactions showed that the local institutions had a net buying position of RM23.0 million, offset by the net selling flow from local retailers and foreign investors at RM8.1 million and RM14.9 million.

Fixed Income

MGS benchmark yield for 3-year and 5-year was flat at 3.400% and 3.545%, but the 7-year yield -2.5 bps to3.810%, and 10-year -2.0 bps to 3/920%.

Source: AmInvest Research - 5 Apr 2023