The US

The Dollar index gained 0.311% to 102.88. Treasury Secretary Janet Yellen has  cautioned that a default on government debt could lead to millions of Americans  losing their income payments, leading to a recession that could destroy many  American jobs and businesses. She stated that such a crisis would be further  exacerbated by potential disruptions to the federal government's operations,  including law enforcement, border security, and defence.

US equities & sovereign bonds

Wall Street closed higher as the Dow Jones was up by 1.24% to 33,421, S&P500  increased by 1.19% to 4,159, and Nasdaq rose by 1.285% to 12,501.  The UST10Y benchmark yield added 3 bps to 3.564% and the UST2Y up 7 bps to  4.154%, widening the inverted differential to 59 bps.

Eurozone

The Euro was down 0.20% to 1.084. The Euro Area's consumer inflation remained  at 7.0% in April 2023, slightly higher than the previous month of 6.9% but still  significantly above the European Central Bank's 2.0% target. While energy prices  rebounded and services increased, inflation slowed for food, alcohol, and tobacco,  as well as non-energy industrial goods. Core inflation, which excludes volatile  items, eased slightly to 5.6% (March 2023: 5.7%).

The UK

The British Pound was down 0.01% to 1.249. The Bank of England Governor  Andrew Bailey has said that the UK is experiencing a wage-price spiral as he  pledged to raise interest rates to bring inflation back to the central bank’s target of  2%. The governor pointed to the “second-round” effects of inflation, where rapid  price rises in energy and food spread to generalised wage and price setting by  companies, causing core inflation to rise.

Japan

The Japanese Yen weakened 0.95% to 137.68. Preliminary data showed that the  Japanese economy grew by 0.4% q/q in the 1Q2023, beating market expectations  of a 0.1% increase. Private consumption rose 0.6% and business investment  increased by 0.9%, while government spending stagnated for the third quarter in a  row. Net trade contributed negatively due to a greater fall in exports compared to  imports.

China

The Yuan went down 0.28% to 6.997. The latest data shows robust growth in  consumption but a slowdown in the real estate sector. Retail sales rose sharply by  18.4%, with some sectors reporting nearly 50% growth.

South Korea

The Won gained 0.07% to 1,338. South Korea's Ministry of Trade, Industry and  Energy has signed a memorandum of understanding with Canada's economic  development and natural resources departments to expand economic ties and  bolster cooperation in the supply chains of key minerals. The agreement was  signed during Canadian Prime Minister Justin Trudeau's visit to Seoul.

Australia

The Aussie gained 0.06% to 0.666. Australia's wage price index rose by 3.7% y/y  in 1Q2023, the highest reading since 3Q201. Wages in the private sector  accelerated to 3.8%, the fastest pace since 2Q2012, and wages in the public sector  increased to 3.0%, the fastest since 1Q2013.

Crude oil

Oil prices traded higher where Brent was up by 2.74% to US$77 per barrel and WTI was up by 2.78% to US$73 per barrel.

Gold

Gold was down 0.37% to US$1,982/oz, trending lower after peaking above the  US$2,000-level for the last two weeks.

Malaysia Highlights

The Ringgit weakened by 0.60% to 4.526. Malaysia's Minister of Communications  and Digital has stated that the digital economy is expected to contribute 25.5% to  the economy by 2025. The country is also set to attract significant investments in  data centres, innovation, and the digital economy in the coming months, which  could bring this figure forward.

Ringgit outlook for the week

The support level for USD/MYR is seen at 4.470 and 4.480 while resistance is  pinned at 4.520 and 4.530.

FBM KLCI

The FBM KLCI went up by 0.06% to 1,424. Detailed transactions showed that the  local institutions were net buyers with RM91.0 million. Local retailers and foreign  investors were net sellers with RM16.6 million and RM74.4 million.

Source: AmInvest Research - 18 May 2023