The US

The Dollar index weakened 0.04% to 104.17. The market is still waiting for the resolution on the US debt ceiling impasse as the bipartisan deal to lift the USD31.4 trillion debt ceiling is going through vote by the full Republican-controlled House of Representatives, before it can proceed to Senate for approval.

On macro front, In March 2023, the S&P CoreLogic Case-Shiller 20-city home price index in the US experienced a decline of 1.1% y/y, marking the first decrease since May 2012. This drop, however, was smaller than the predicted 1.6% decline. The higher mortgage rates and the economic weakness are likely to continue affecting housing prices in the coming months.

US Equities & Sovereign Bonds

Wall Street was mixed. Dow Jones was down by 0.15% to 33,043, while S&P500 increased by 0.002% to 4,206, and Nasdaq up by 0.32% to 13,017.

The UST10Y benchmark yield was down 11 bps to 3.687% and the UST2Y was down 11 bps to 4.450%, widening the inverted differential to 76 bps.

Euro Area

The Euro was up 0.25% to 1.074. On the data front, the economic sentiment indicator in the Euro Area fell to 96.5 in May 2023 from 99.0 in the prior month as the economy is still struggling to find growth amidst high inflation and elevated interest rates. Sentiments were seen deteriorated across all sectors and consumers’ confidence remained in the negative territory (-17.4 vs -17.5 in April).

The UK

The British Pound was up 0.48% to 1.241. The food inflation in UK has eased to 15.4% in May 2023 according to the British Retail Consortium (BRC), signalling a peak and starting to come down. The weaker prices can be attributed to the lower energy and commodity prices.

Japan

The Japanese Yen gained 0.47% to 139.79. There was an emergency meeting among officials from the Ministry of Finance, Bank of Japan, and Financial Services Agency yesterday, discussing on the Yen’s movement as it continued to depreciate to its six-months low against the US Dollar.

China

The Yuan weakened by 0.12% to 7.080. Official data showed that youth unemployment rate, which defined among 16 to 24 years old, hit a record high of 20.4% in April 2023, four times the broader unemployment rate.

South Korea

The Won was down 0.23% to 1,325. South Korea’s household debt-to-GDP ratio was the highest among 34 major economies with 102.2%. This is compared to Hong Kong with 95.1%, Thailand with 85.7% and Britain with 81.6%, a data showed by the Institute of International Finance.

Australia

The Aussie weakened 0.34% to 0.652. The seasonally adjusted estimate for dwellings approval in Australia dropped 8.1% m/m in April 2023, which translates into a drop of 24.1% annual changes, extending the decline since end of 2021 amidst elevated interest rates.

Crude Oil

Ahead of the upcoming OPEC+ meeting on 4 June, Saudi Arabia and Russia, the leading producers in the group, are in disagreement over output policy. Saudi Arabia is growing frustrated with Russia, as it seems that Russia has not been fulfilling its commitment to reduce oil production, which is complicating Saudi Arabia's efforts to raise oil prices.

Oil prices traded lower where Brent was down by 4.58% to USD74 per barrel and WTI was down by 4.42% to USD69 per barrel.

Gold

Gold prices initially faced losses but later rebounded by 0.83% to USD1,959/oz. The recovery was attributed to a decline in the dollar and a drop in Treasury yields. This positive market sentiment was driven by optimism surrounding the US debt ceiling deal.

Malaysia Highlights

The Ringgit gained by 0.04% to 4.603. Malaysia is set to roll out Energy Transition Roadmap in phases starting in June 2023, further accelerating Malaysia’s net zero ambition. The roadmap outlines the government target to achieve renewable energy capacity target of 70% by 2050.

Ringgit Outlook for the Week

The support level for USD/MYR is seen at 4.600 and 4.620 while resistance is pinned at 4.650 and 4.670.

FBM KLCI

The FBM KLCI went down by 0.57% to 1,397. Detailed transactions showed that the local institutions and local retailers were net buyers with RM61.3 million and RM51.7 million, respectively. Foreign investors were net sellers with RM113.0 million.

Source: AmInvest Research - 31 May 2023