The US

The Dollar index rose 0.54% to 102.10 following better than expected macro data which raises the bet for further Fed rate hike. The NY State Empire Manufacturing Index improved to 10.8 in April 2023 from -24.6 and well above market expectation of -18, marking the best reading since November 2022. In addition, businesses also expect improving conditions over the next six months. At the same time, confidence among US single-family homebuilders also improved for the fourth straight months with the reading on NAHB/Wells Fargo Housing Market index rose to 45 from 44 (cons: 44).

US Equities & Sovereign Bonds

Wall Street traded higher as the Dow Jones rose 0.30% to 33,987, S&P500 climbed 0.33% to 4,151, and Nasdaq gained 0.28% to 12,158.

The UST10Y benchmark yield added 9 bps to 3.600% and the UST2Y added 10 bps to 4.194%%, widening the inverted differential to 59 bps.

Eurozone

The Euro fell 0.60% to 1.093. In reducing Europe’s reliance on China, German Chancellor Olaf Scholz said that he will urge trade agreement between the European Union and Indonesia. The negotiations between Jakarta and Brussels, which have been going on since 2016, will benefit Germany in diversifying its trade partners including for crucial commodities.

The UK

The British Pound shed 0.30% to 1.238. A survey by Deloitte showed that confidence levels among business leaders surged since the start of the year. It was helped by the decrease in energy prices, improving inflation condition and alleviating Brexit concerns. Despite the most recent banking crisis that occurred in March and higher interest rates, credit for UK corporates remains available to be utilized.

Japan

The Japanese Yen weakened 0.51% to 134.47. The BoJ’s assistant governor Tokiko Shimizu argued on Friday that the Japan’s economy is struggling with “extremely high” uncertainties amidst slowing global growth and recent financial market stress. She also said that it is essential for the BoJ to continue conducting monetary easing and support the economy to boost wages in achieving the 2.0% inflation target at a sustainable rate.

China

The Yuan weakened 0.16% to 6.880. During its quarterly monetary policy committee meeting, the PBoC pledged for further support for the economy as the recovery progress is roiling with uncertainties following the lift of pandemic rules. Data pointing towards recovery in service sector, but low inflation and subdued manufacturing activity remain the obstacle. On another note, the PBoC kept its interest rate on medium-term lending facility at 2.75% for eight consecutive months, resulting in CNY20 billion net liquidity injection into the financial system. This is after the central bank had cut reserve ratio requirement (RRR) in March 2023.

South Korea

The Won depreciated 0.94% to 1,311. The Bank of Korea (BoK) stated in a report that South Korea’s exports to China are expected to remain weak before recovering in the second half of 2022 as the effects of reopening will start to materialize. The report also noted that as the pandemic rules were lifted, manufacturing inventories remained high and delaying the need for South Korea’s exports.

Australia

The Aussie dollar fell 0.09% to 0.670. Ahead of Australia’s budget day on 9th May 2023, the government is looking to find new ways on getting more tax revenues to pay for programs including vast defence and healthcare spending. Amidst high commodity prices and elevated inflation, the country is expected to run a budget deficit of 2.0% during 2022/2023 financial year.

Crude Oil

Oil prices traded lower as the concerns for further US Fed interest rate hike resurfaced. Brent fell 1.73% to US$85 per barrel while WTI dropped 2.05% to US$81 per barrel.

Gold

Tracking the Sentiment in Oil Prices, Gold Prices Fell 0.45% to US$1,995/oz.

Malaysia Highlights

The Ringgit depreciated 0.48% to 4.423. The Communications and Digital Minister said that Malaysia’s digital economy is set to hit its goal of contributing more than 25.5% of the domestic’s GDP by 2025. It was attributed mainly by the recent uptrend in digital adoption and major investments inflow into the country.

Ringgit Outlook for the Week

The support level for USD/MYR is seen at 4.390 and 4.400 while resistance is pinned at 4.430 and 4.440.

FBM KLCI

The FBM KLCI fell slightly by 0.02% to 1,435. Detailed transactions showed that the local institutions and retailers were the net sellers with RM25.7 million and RM8.4 million flows, respectively, while foreign investors were the net buyers with RM34.1 million flow.

Fixed Income

Local bond market saw some sell-offs as the MGS 3-year benchmark yield +0.5 bps to 3.334%, 5-year +3 bps to 3.520%, 7-year +1.5 bps to 3.736%, and 10-year +2 bps to 3.860%.

Source: AmInvest Research - 18 Apr 2023