The US

The Dollar index weakened 0.35% to 104.21. President Joe Biden and House  Minority Leader Kevin McCarthy have come to an agreement to raise the US debt ceiling and prevent a potentially disastrous default. The agreement involves suspending the USD31.4 trillion debt ceiling until January 2025, ensuring that the government can continue to meet its financial obligations. As part of the deal, nondefense discretionary spending would remain at current year levels in 2024, with a  modest 1% increase in 2025. 

US Equities & Sovereign Bonds

Wall Street closer higher. Dow Jones was up by 1.00% to 33,093, while S&P500  increased by 1.30% to 4,205, and Nasdaq was up by 2.19% to 12,976. 

The UST10Y benchmark yield was down 2 bps to 3.798% while the UST2Y rose 3 bps to 4.562%, widening the inverted differential to 76 bps. 

Eurozone

The Euro was down 0.02% to 1.072. Inflation for May 2023 (flash estimates) is expected to be published later this week, where consensus is expecting inflation to be at 6.3% y/y (April 2023 actual: 7.0% y/y).

The UK

The British Pound was up 0.19% to 1.234. Economists have issued a warning to  PM Rishi Sunak that the country's economy could face a recession next year due to persistently high inflation. They predict that interest rates could exceed 5%  before the next general election, leading to increased borrowing costs for mortgages and loans for millions of households.

Japan

The Japanese Yen weakened 0.39% to 140.06. Japan's central bank governor,  Kazuo Ueda, has cautioned that Japanese companies are changing their behavior regarding wages and prices, which increases the risk of a monetary policy error. The Governor pledged that the Bank of Japan would act swiftly if there were any indications of structural shifts in price pressures throughout the economy.  However, he acknowledged uncertainty in its forecasts, especially as inflation in the country reaches levels not seen in decades.

China

The Yuan gained by 0.22% to 7.065. China's Commerce Minister Wang Wentao acknowledged the ongoing disturbances and challenges in economic and trade development within the Asia-Pacific region. He made these remarks during the  Asia-Pacific Economic Cooperation (APEC) conference. He expressed his understanding of the difficulties faced by the region but emphasized that China, as  a significant developing country, is committed to making meaningful contributions to address these challenges.

South Korea

The Won was up 0.12% to 1,325. Chinese Commerce Minister Wang Wentao and  South Korea's Trade Minister Ahn Duk-geun met during the 2023 APEC Ministers  Responsible for Trade Meeting and expressed their commitment to enhancing bilateral trade and economic cooperation. The ministers discussed the importance of maintaining the stability of industrial and supply chains and emphasized the need to strengthen bilateral, regional, and multilateral collaboration.

Australia

The Aussie gained 0.18% to 0.652. Australian retail sales were unchanged in April 2023, putting an end to three consecutive months of growth. This indicates that consumers are curbing their spending due to nearing peak interest rates and persistent cost-of-living pressures. The weaker performance was primarily driven  by reduced spending on food-related items.

Crude Oil

Oil prices traded higher where Brent was up by 0.90% to USD77 per barrel and WTI was up by 1.59% to USD73 per barrel. 

Gold

Gold Was Up 0.26% to USD1,946/oz, After Reaching the 2,000-level Three Weeks  Ago.

Malaysia Highlights

The Ringgit gained by 0.57% to 4.600. The Malaysian government has stated that it does not plan to revise its economic growth forecast for the year despite the recent depreciation of the ringgit. The Economy Minister mentioned that the government will continue to monitor the movement of the local currency. He attributed the ringgit's depreciation in the past two weeks to discussions on the  United States' debt ceiling, which impacted market sentiment.

Ringgit Outlook for the Week

The support level for USD/MYR is seen at 4.590 and 4.600 while resistance is pinned at 4.620 and 4.650.

FBM KLCI

The FBM KLCI went up by 0.04% to 1,403. Detailed transactions showed that the  local institutions and local retailers were net sellers with RM38.1 million and RM4.5 million, respectively. Foreign investors were net buyers with RM42.6 million

Source: AmInvest Research - 29 May 2023