The US

The Dollar index gained 0.16% to 101.38. Treasury Secretary Janet Yellen warns that if Congress does not raise the US borrowing limit, the country could face an economic crisis. She suggests that President Joe Biden may act on his own to prevent a federal default. Biden is set to meet with congressional leaders from both parties to discuss the matter. Republicans want spending cuts in exchange for raising the borrowing limit, but Biden believes that default threats should not be used as leverage in budget negotiations.

US Equities & Sovereign Bonds

Wall Street was mixed as the Dow Jones was down by 0.17% to 33,619, S&P500 increased by 0.05% to 4,138, and Nasdaq rose by 0.18% to 12,257.

The UST10Y benchmark yield added 7 bps to 3.507% and the UST2Y up 9 bps to 4.001%, widening the inverted differential to 49 bps.

Eurozone

The Euro was down 0.14% to 1.100. Investor confidence in the Eurozone unexpectedly decreased in May, according to a survey by Sentix. Stubborn inflation and concerns about energy disrupted hopes of a spring recovery, causing the Sentix index for the Eurozone e to fall to -13.1 points in May 2023 from -8.7 in April 2023.

The UK

The British Pound fell 0.14% to 1.262, as the financial market awaits for the decision from the Bank of England (BoE) monetary policy committee later this Thursday. Currently, the BoE’s policy rate stands at 4.25%.

Japan

The Japanese Yen weakened 0.22% to 135.10. Minutes from the March Bank of Japan (BOJ) policy meeting revealed that some board members are concerned about the risk of inflation rising more than anticipated. However, a few members also noted positive signs of progress toward the 2% target in the Japanese economy. The board discussed how companies were raising prices to account for the increase in raw material costs and how the price increases were extending to services.

China

The Yuan weakened 0.07% to 6.914. While the post zero-Covid policy recovery in China’s economy in general has been slower-than-expected, a sign of resilience was observed across the tourism and consumer activity. According to Bloomberg, tourism and consumer activity increased significantly on the first day of the holiday as China loosened its Covid-19 response measures, and residents rushed to travel and spend.

South Korea

The Won lost 0.19% to 1,321. South Korea's Finance Minister said the government will strengthen its alliance with the US in the chip sector by using the outcome of President Yoon's recent visit to the US. The two countries agreed to cooperate in next-generation semiconductors and global supply chains. The finance minister plans to establish a strong technological and cultural alliance by creating joint projects and building a cooperative forum between the government and the private sector.

Australia

The Aussie gained 0.49% to 0.678. Australia's Labor party has been criticized for being too lenient on gas producers after announcing plans to increase revenue by AUD 2.4bn over four years by bringing forward the implementation of the petroleum resource rent tax (PRRT). The changes include a 90% cap on PRRT deductions, meaning major liquefied natural gas projects will pay the tax about a decade earlier than expected, but several politicians are calling for more aggressive action.

Crude Oil

Oil prices traded higher, as recessionary fears have cooled down due. Brent was up by 2.27% to US$77 per barrel and WTI was up by 2.55% to US$73 per barrel.

Gold

Gold Was Up 1.63% to US$2,021/oz.

Malaysia Highlights

The Ringgit weakened by 0.02% to 4.437. Malaysia's Economy Minister said that prices of goods are stable, and inflation is on track to reach a healthy level. The government is monitoring essential items to prevent drastic price increases that could harm purchasing power, but recovering from supply shortages takes time.

Ringgit Outlook for the Week

The support level for USD/MYR is seen at 4.440 and 4.450 while resistance is pinned at 4.460 and 4.470.

FBM KLCI

The FBM KLCI went up by 0.19% to 1,434. Detailed transactions showed that the local institutions and foreign investors were net buyers with RM12.2 million and RM9.4 million. Local retailers were net sellers with RM21.6 million.

Source: AmInvest Research - 9 May 2023