The US

The Dollar index gained 0.26% to 101.85. The Federal Reserve (Fed) Bank of Cleveland president Loretta Mester believes the Fed has more interest rate rises ahead, to keep inflation and inflation expectations anchored at 2.0%. Mester said she sees monetary policy moving "somewhat further into restrictive territory this year, with the Federal Funds Rate moving above 5%, and the real federal funds rate staying in positive territory for some time." For the record, Mester is currently not a voting member.

US Equities & Sovereign Bonds

Wall Street was mixed where the Dow Jones was up by 0.24% to 33,483, while S&P500 down by 0.25% to 4,090, and Nasdaq fell by 1.07% to 11,997.

The UST10Y benchmark yield declined by 3 bps to 3.311% and the UST2Y was also down by 5 bps to 3.780%, narrowing the inverted differential to 47 bps.

Eurozone

The Euro weakened 0.45% to 1.090 on stronger US Dollar. European banks are turning to bespoke deals with investors to offload risk on multi-billion Euro loan portfolios and improve their financial strength, as they seek to reduce how much capital they need to cover potential losses especially after the recent events surrounding the US and Europe’s banking system.

The UK

The British Pound also weakened by 0.31% to 1.246. The Bank of England policymaker, Silvana Tenreyro, has warned that the turmoil at Silicon Valley Bank and Credit Suisse could impact the UK economy if it results in a sustained increase in bank funding costs. She stated that it would become clear in the "coming weeks and months" whether the turmoil will cause credit conditions to tighten and that a large change might force the central bank to respond.

Japan

The Japanese Yen gained 0.30% to 131.32. Data from the Bank of Japan shows that Japan's economic output remained below full capacity for the 11th consecutive quarter in the 4Q2022 with an output gap of -0.43%, widening from -0.08% in the 3Q2022.

China

The Yuan remained at 6.879 due to holiday. Small entrepreneurs in China are registering more new businesses after three years of lockdowns and strict Covidrelated policies, according to registration data by Qichacha. Nearly 7.57 million small and micro-sized enterprises were registered in the 1Q2022, marking a 16% increase compared with the same period last year.

South Korea

The Won gained 0.40% to 1,311. South Korea's inflation eased to 4.2% in February 2023 (January 2023: 4.8%). The Bank of Korea (BOK) stated that inflation is likely to ease further but remain higher than the central bank's 2% target throughout the year, while core inflation will cool at a slower pace. Consensus now expects the BOK’s tightening cycle is over due to concerns about the global banking sector and local economic prospects.

Australia

The Aussie dollar weakened 0.46% to 0.672. Reserve Bank of Australia (RBA) Governor said that a pause in interest rate rises does not mean that increases are over, and that further tightening may be necessary to control inflation. The central bank left interest rate at 3.6% on Tuesday to assess the impact of past hikes. However, the Board will reassess policy again in May with updated forecasts for the economy and inflation.

Crude Oil

After OPEC+ production cut, Saudi Arabia has announced that that it will hike the selling prices to Asian customers in May. According to Bloomberg, Saudi Aramco will raise the Arab Light to Asia’s customers by 30 cents per barrel, and currently ships about 60% to Asia. Oil prices were mixed, where Brent up by 0.06% to US$85 per barrel while WTI down by 0.12% to US$81 per barrel.

Gold

Gold Was Up 0.02% to US$2,021/oz, the Highest Level Since the Covid-19 Pandemic.

Malaysia Highlights

The Ringgit appreciated 0.11% to 4.400. The luxury goods tax announced in Budget 2023 is not meant to replace the goods and services tax (GST), according to Deputy Finance Minister II. The government is studying several aspects of the luxury goods tax, such as the tax structure and the rate to be imposed. The Finance Ministry is also gathering feedback from stakeholders, such as manufacturers, retailers, and tourism industry players and added that the government has not decided on reintroducing the GST as it would have a significant impact on the economy and the cost of living.

Meanwhile, S&P Global expects the Malaysian economy to grow 3.2% in 2023 quoting external weakness. The agency also foresees another 25 bps hike in card.

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 was down 0.004% to 1,430. Detailed transactions showed that the local institutions were the net buyer with RM28.8 million. Foreign investors and local retailers were net seller of RM4.4 million and RM24.4 million, respectively.

Fixed Income

MGS benchmark yield for 3-year -1.0 bps to 3.390%, 5-year -3.0 bps to 3.515%, 7-year -5.0 bps to 3.725%, and 10-year -3.5 bps to 3.865%.

Source: AmInvest Research - 6 Apr 2023