The US

The Dollar index gained 0.15% to 104.33. Despite a decrease in inflation over the past year, Americans remain concerned about the rising prices. A recent study conducted by Numerator reveals that 78% of Americans believe that inflation will continue to increase in the coming months. Moreover, 68% of respondents express pessimism about the state of the U.S. economy in the near future.

On macro front, the US job openings stood at 10.1 million in April 2023 (May 2023: 9.75 million), led by openings in the retail trade, health care & social assistance, and mining & logging. On the other hand, job quits stood at 3.8 million in April 2023 (May 2023: 3.8 million)

US Equities & Sovereign Bonds

Wall Street closed lower, where Dow Jones was down by 0.41% to 32,908, S&P500 decreased by 0.61% to 4,180, and Nasdaq fell by 0.63% to 12,935.

The UST10Y benchmark yield was down 4 bps to 3.643% and the UST2Y declined 5 bps to 4.403%, and the inverted differential remained at 76 bps.

Euro Area

The Euro was down 0.43% to 1.069. Germany has reported a significant slowdown in inflation, aligning with other major Euro Area countries. This development reinforces the stance of some European Central Bank (ECB) officials who believe that interest rate hikes are nearing their end. According to the Federal Statistics Office, consumer prices in Germany increased by 6.3% y/y in May 2023, down from 7.6% y/y in April 2023 and lower than the median estimate of 6.7% y/y from a Bloomberg survey.

The UK

The British Pound was up 0.22% to 1.244. A recent survey by Lloyds Bank's business barometer indicates that London businesses are expected to lead the UK economy out of its slowdown. However, these businesses express significant concerns regarding the potential impact of rising interest rates and inflation. Despite a four-point decrease in confidence, London still holds the highest confidence reading among all regions in the UK.

Japan

The Japanese Yen gained 0.32% to 139.34. In April 2023, retail sales in Japan increased by 5.0% y/y, slower than the 6.9% y/y in March 2023. This indicates a continuous recovery from the pandemic's impact on consumer spending. The automobile retail industry witnessed the highest growth at 15.1%, followed by other retail sectors, drug and cosmetic retailers, department stores, food retailers, and non-store retailers. However, machinery and equipment retail, fuel retail, and clothing and personal goods experienced declines.

China

The Yuan weakened by 0.41% to 7.109. In May 2023, the official NBS NonManufacturing PMI for China decreased to 54.5 (April 2023: 56.4. Although it indicates the fifth consecutive month of expansion, it was the slowest since January 2023. New orders, foreign sales, and employment all contracted, while delivery time slightly increased.

South Korea

The Won was down 0.06% to 1,326. Official data from South Korea shows that in April 2023, both factory production and retail sales experienced declines, indicating a challenging quarter ahead for the country's economy. Factory output decreased by 1.2% m/m. On the consumption side, retail sales declined by 2.3% m/m, the first monthly fall since January and the largest drop in five months.

Australia

The Aussie weakened 0.21% to 0.650. Reserve Bank of Australia Governor Philip Lowe has expressed his commitment to taking necessary measures to restore inflation to its target level. He warned that inflation risks are leaning towards the upside, and households should prepare for potential challenges. Although inflation expectations are currently stable, Lowe emphasized that this cannot be assumed to continue, as persistent inflation could result in higher interest rates and increased unemployment.

Crude Oil

Oil prices traded lower as manufacturing PMI data from China was disappointing. Brent was down by 1.20% to USD73 per barrel and WTI was down by 1.97% to USD68 per barrel.

Gold

Gold was up 0.83% to USD1,962/oz, continuing its upward trend this week and trading at the same level as back on 23 May 2023.

Malaysia Highlights

The Ringgit weakened by 0.23% to 4.613. The Prime Minister stated that the higher allocation provided to Sabah and Sarawak, particularly in the country's annual budget, is determined by the needs of these two states. He clarified that fairness does not mean distributing funds equally but rather addressing the specific requirements of each state. The allocation is based on the needs of the states rather than providing an identical amount to all.

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 0.70% to 1,387. Detailed transactions showed that the local institutions and local retailers were net buyers with RM165.2 million and RM34.1 million, respectively. Foreign investors were net sellers with RM199.3 million.

Source: AmInvest Research - 1 Jun 2023