The US

The DXY fell by 0.13% to 101.48, but pared weakness into the closing of the US  session. The lower USD came alongside declining UST yields overnight as US  CPI slowed to 4.9% y/y in April 2023 and easing from 5.0% in March 2-23. Today  more US inflation data, the PPI, is due for release. CPI for April is the first reading  below 5% in about two years and supports expectation of slowing Fed tightening or even for a pause that is becoming a centre of argument lately.

US equities & sovereign bonds

Wall Street was mixed as the Dow Jones was down by 0.09% to 33,531, S&P500  increased by 0.45% to 4,138, and Nasdaq rose by 1.04% to 12,306. 

UST rallied overnight with yields down >10bps on the front end, further supported  by officials’ meeting on the debt ceiling ending with no plans. UST2Y fell 11 bps to  3.910% and 10Y fell 8 bps to 3.443% and tightening the negative spread by 2 bps  from 50bps the day before.

Eurozone

The Euro was up 0.18% to 1.098 alongside weaker DXY but pared gains below the  1.100 level. ECB talk yesterday was Portugal’s Centeno suggesting a rate cut by  2024.

The UK

The British Pound climbed 0.03% to 1.263 ahead of the Bank of England meeting. The Bank of England is expected to raise interest rates for the 12th consecutive  meeting on Thursday due to high inflation, but there are indications that the end of  such hikes may be approaching. Annual headline inflation remained above 10% in  March, driven by high food and energy costs, and core inflation also remained  unchanged.

Japan

The Japanese Yen gained 0.66% to 134.34. A Reuters poll suggests that Japan's  economy likely grew at the fastest pace in three quarters in January-March, driven  by spending in the services sector. The country has been relatively unaffected by  the global economic downturn due to the delayed reopening of its services sector  and the central bank's loose monetary policy.

China

The Yuan weakened by 0.14% to 6.930. Several American companies have  expressed caution about their growth prospects in China, citing a slower-thanexpected recovery after the lifting of the zero-Covid restrictions. Despite China's  faster-than-expected 1Q economic growth, these companies indicate that demand  has not yet returned to pre-pandemic levels. In April, China's imports declined  significantly, highlighting weak domestic demand due to a struggling property  market, job uncertainty, and global economic instability.

South Korea

The Won was down by 0.08% to 1,325. Employment growth in South Korea slowed  in April 2023, particularly in the manufacturing industry. The number of employed  individuals in April was 28.4 million, up 354,000 from the same month last year,  which was a slower increase compared to the growth of 469,000 in March 2023.  The slowdown in employment growth was attributed to uncertainties related to the  continued decline in exports and interest rate hikes.

Australia

The Aussie gained 0.25% to 0.678. Australia's Labor government is adopting a  path of fiscal restraint to boost its economic credibility and support the central  bank's efforts to control high inflation. Treasurer Jim Chalmers announced that the  budget would record a small surplus of 0.2% of GDP in the current fiscal year.  However, rising interest rates have slowed the economy, causing the government's  books to return to a deficit of 0.5% of GDP in fiscal 2024, increasing to 1.3% the  following year.

Crude oil

Oil prices traded lower, where Brent was down by 1.33% to US$76 per barrel and WTI was down by 1.56% to US$73 per barrel. 

Gold

Gold was down 0.22% to US$2,030/oz.

Malaysia Highlights

The Ringgit fell by 0.24% to 4.459 but came ahead of overnight USD weakness as  trading for the local currency was cautious ahead of the US CPI release. Still  awaited on the local front is tomorrow’s release of 1Q2023 GDP, we expect the  growth to be in the range of 4.8 – 5.0%, supported by domestic demand.

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 down by 0.49% to 1,426. Detailed transactions showed that  the local institutions and local retailers were net buyers with RM20.3 million and  RM15.3 million. Foreign investors were net sellers with RM35.6 million.

Source: AmInvest Research - 11 May 2023