The US

Safe haven interest with weakness in the US stock market and cooling inflation  numbers aided USD. DXY remained closed at 102.06, translating into 0.57% gain  compared to the previous session. On the macro front, data showed producer  inflation fell to 2.3% y/y during April 2023 from 2.7% y/y in the prior month and compared to 2.4% market consensus, which suggests inflationary pressure is  subsiding. 

US Equities & Sovereign Bonds

UST sustained strength last night, continuing its pickup after the CPI release earlier  this week. The UST10Y and 30Y shed 4-5 bps. However, US stocks were pressured amid concerns over banking sector and tech  corporate performance as well as release of higher tick in US weekly jobless  claims. The Dow Jones fell 0.66% to 33,310, S&P500 shed 0.17% to 4,131, while Nasdaq gained 0.18% to 12,329. 

Eurozone

The Euro dipped 0.60% to 1.092. One of the ECB policymakers Joachim Nagel  stated that “meeting-by-meeting” approach is the most appropriate for the ECB.  This means that the central bank will continue making its decision based on the  latest data available. 

The UK

The British Pound failed to take advantage from the BoE’s decision as it fell 0.90%  to 1.251 by the end of the session. The BoE’s decided pushing its interest rate by  25 bps to 4.50%, in line with market expectation amidst sticky inflation. The central  bank also stated that further tightening in monetary policy “would be required” if  there are signs of more persistent price pressure. 

Japan

The Japanese Yen weakened 0.14% to 134.53. The summary of opinions during  the BoJ’s April meeting showed a sign of possible policy shift in the future as some  members pointed out the side effects of the yield curve control and avoiding sharp  volatility in the market by not changing its policy too quick or too late. But for now,  due to the uncertain global economic outlook, the central bank is expected to  maintain the current easing policy. 

China

The Yuan took the hit as well, closing weaker by 0.27% at 6.949. China’s recovery  post-Covid is seen to be patchy as its inflation rate for April 2023 fell further to 0.1%  y/y from 0.7% y/y (cons.: 0.4%), taking cue from the further easing of food,  transport, and housing prices.

South Korea

The Won depreciated 0.08% to 1,326. The South Korea Development Institute, top  government research organisation, has cut its growth projection for 2023 to 1.5%  from 1.8%, citing more severe export decline will likely outweigh the resilient private  consumption. 

Australia

The Aussie dollar dipped 1.14% to 0.670. Consumers’ inflation expectation ticked  up to 5.0% in May 2023, suggesting the risk of inflation rate could remain higher  for longer, which in turn will prompt the RBA to hike its interest rate further.  Crude oil Oil prices fell as the market was overwhelmed by the recession jittery prompted by  weak Chinese economic data and higher US jobless claims. Brent fell 1.87% to  US$74 per barrel while WTI dipped 2.33% to US$70 per barrel. 

Gold

Gold Was Fell 0.74% to US$2,015/oz. 

Malaysia Highlights

MYR weakened 0.12% yesterday amid USD strength post release of US CPI  numbers. USD/MYR rose above 4.460 level and traded within the range of 4.448  and 4.468. Also, domestic unemployment rate showed an unchanged level at 3.5%  during March 2023. 

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 0.04% to 1,425. Detailed transactions showed that  the local institutions and retailers were net buyers with RM8.9 million and RM25.4 million. Foreign investors were net sellers with RM34.4 million.

Fixed Income

Local benchmark MGS yields fell as the 3-year -2.0 bps to 3.360%, 5-year -1.0 bps  to 3.465%, 7-year -1.0 bps to 3.650%, and 10-year -5.0 bps to 3.690%. 

Source: AmInvest Research - 12 May 2023