The US

The Dollar index gained by 0.68% to 103.58, benefitting from the hopes of debt  ceiling resolution and stronger labour market data. Report showed that the number  of new unemployment benefit claims dropped to 242k throughout last week, falling  short from market expectations of 254k and previous week reading of 264k,  indicating labour market in the US continued to be tight. In addition, remark by  Dallas’s President Lorie Logan was tilted towards hawkish side suggesting current  economic data does not “justify” for a Fed pause just yet.

US equities & sovereign bonds

Wall Street closed higher. Dow Jones was up by 0.34% to 33,536, S&P500 up by 0.94% to 4,198, and Nasdaq up by 1.51% to 12,689.

The UST10Y benchmark yield added 8 bps to 3.646% and the UST2Y went up 10  bps to 4.252%, widening the inverted differential to 60 bps.

Eurozone

The Euro was down 0.65% to 1.077. ECB Vice President Luis de Guindos stated  that there is more rate hike need to be done by the central bank but most of  tightening has already been done, pointing towards the threat of service inflation  as the most worrying factor for the ECB. ECB will release its latest Economic  Bulletin while ECB’s Lagarde is scheduled to speak today.

The UK

The British Pound was down 0.62% to 1.241. The tone from BoE officials was on  the hawkish side as well as its Governor Andrew Bailey said the UK inflation is  being driven by “second-round effects” which warrants for the central bank to  further adjust its interest rate to fight inflation and bring the inflation back to the  2.0% target.

Japan

The Japanese Yen weakened 0.75% to 138.71. Japan’s trade deficit narrowed to  JPY 432.4 billion during April 2023 from JPY 854.9 billion, marking the highest level  since early 2022, supported by easing commodity prices and stronger Yen.

China

The Yuan went down 0.59% to 7.038. Worries over geopolitics and concerns over  short-term economic growth in China post-Covid shutdowns continue to hamper  CNY sentiment.

South Korea

The Won gained 0.29% to 1,334. Both South Korea and Canada agreed to boost  cooperation on supply chains especially on critical minerals used in electric vehicle  and to counter North Korea’s nuclear threat.

Australia

The Aussie weakened 0.57% to 0.662. Australia’s seasonally adjusted  unemployment rate inched higher to 3.7% during April 2023 from 3.5% and higher  than market consensus of 3.5% as the number of employments saw the first  decline in three months at 4.3k compared to 25k growth.

Crude oil

Oil prices closed lower, where Brent fell 1.43% to US$76 per barrel and WTI fell  1.33% to US$72 per barrel.

Gold

Gold fell by 1.23% to US$1958/oz, continuing its downward trend.

Malaysia Highlights

The Ringgit weakened by 0.26% to 4.538. Ringgit government bonds fell for  another day, lacking support amid the weak moving US Treasuries market.  Sovereign bonds which saw yields rising outnumbered those that fell by two to one.

Corporate bonds were in the opposite direction versus the sovereign bonds, with a pickup seen in most papers traded yesterday amid suspected better risk appetite.  Total traded amount in non-sovereign papers was RM179 mil.

Ringgit outlook for the week

The support level for USD/MYR is seen at 4.500 and 4.510 while resistance is  pinned at 4.540 and 4.550.

FBM KLCI

The FBM KLCI gained 0.26% to 1,428. Detailed transactions showed that the local  institutions and foreign investors were net buyers with RM26.5 million and RM38.5  million respectively. Local retailers were net seller with RM65.1 million.

Source: AmInvest Research - 19 May 2023