The US

The Dollar index climbed 0.22% to 101.61 amidst a volatile session. Aside from the US debt ceiling problem, investors’ focus has also turned towards US inflation data where the consensus is expecting for core inflation to ease slightly to 5.5% y/y. On another note, the quarterly Senior Loan Officer Opinion Survey showed that credit conditions for both households and businesses continued tightening during the first quarter of the year 2023.

US Equities & Sovereign Bonds

Wall Street closed in the red as the Dow Jones fell 0.17% to 33,562, S&P500 lost 0.46% to 4,119, and tech-heavyweight Nasdaq fell 0.63% to 12,180.

The UST10Y benchmark yield added 1 bps to 3.517% and the UST2Y added 2 bps to 4.022%, widening the inverted differential to 50 bps.

Eurozone

The Euro fell 0.38% to 1.096. The ECB chief economist Philip Lane noted that inflation momentum in food and core components will remain high for now but will slow later during the year. To note, the ECB is projecting inflation to fall below 3.0% during 4Q2023.

The UK

The British Pound gained marginally by 0.02% to 1.262, near its one-year high. House prices in the UK continued to be repressed by the rising interest rate and high cost of living as the Halifax house price index grew only by 0.1% y/y in April 2023, the slowest pace since December 2012.

Japan

The Japanese Yen weakened 0.10% to 135.23. Japan’s March 2023 nominal wages rose 0.8% y/y. However, adjusting for inflation, real wages fell 2.9% y/y, declining for the 12th straight month. This has led to consumers tightening their purses as separate data showed household spending unexpectedly contracted 1.9% y/y, down from 1.6% y/y growth in the previous month.

China

The Yuan depreciated 0.09% to 6.921 following the release of mixed external trade figures. China’s exports slowed to 8.5% y/y in April 2023 from double-digit 14.8% y/y in the prior month, while its imports contracted 7.9% y/y compared to forecast of flat reading, a sign of weak domestic demand

South Korea

The Won depreciated as well by 0.22% to 1,324. South Korea government will expand support on investments in electric vehicle (EV) sector through tax credit as a part of a plan in spurring further growth in strategic industries. This is amidst falling exports and heightened economic uncertainties.

Australia

The Aussie fell 0.29% to 0.676. On the data front, Australia's NAB business confidence index increased to 0 in April 2023, suggesting an equal share of companies that were both pessimistic and optimistic amidst rising global interest rate and still-elevated input costs.

Crude Oil

Oil prices ticked up following an announcement that the US government is planning to purchase oil to replenish the Strategic Petroleum Reserve late this year after the President Joe Biden instructed large sales. Brent gained 0.56% to US$77 per barrel while WTI climbed 0.75% to US$73 per barrel.

Gold

Gold Gained 0.66% to US$2,035/oz as Investors Remain Concerned on the US Debt Limit.

Malaysia Highlights

The Ringgit depreciated 0.25% to 4.448 and traded within the range of 4.436 and 4.451. Malaysia industrial production (IP) for March 2023 slowed to 3.1% y/y (February 2023: 3.4% y/y). For 1Q2023 GDP numbers that will be officially published this Friday, we expect the growth to be in the range of 4.8 – 5.0%, supported by domestic demand. Analysts surveyed on Bloomberg had a wide range of views, with a median forecast of 4.8%, lowest at 4.2% and the highest forecast is at 6.0%.

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 fell 0.08% to 1,433. Detailed transactions showed that the foreign investors were the net buyers with RM81.8 million, being offset by the net selling flow from local institutions and retailers at RM63.9 million and RM17.9 million flows, respectively.

Fixed Income

The benchmark MGS yield for 3-year +2.5 bps to 3.370%, 5-year +1.5 bps to 3.465%, 7-year +1.0 bps to 3.650%, and 10-year +1.0 bps to 3.710%.

Source: AmInvest Research - 10 May 2023