The US

The Dollar index rose 0.12% to 104.13. In May 2023, the Logistics Manager's Index (LMI) recorded a third consecutive month of decline, reaching a record low of 47.3 (April 2023: 50.9). This reading indicates the first contraction in the logistics sector in nearly seven years, primarily driven by a continued softening of the freight market. The transportation utilisation gauge also showed contraction, with shippers utilising less of the available space.

US Equities & Sovereign Bonds

Wall Street closed firmer, where Dow Jones gained marginally by 0.03% to 33,573, S&P500 rose 0.24% to 4,284, and Nasdaq climbed 0.36% to 13,276.

The UST10Y benchmark yield was down 2 bps to 3.660% and the UST2Y added 1 bps to 4.479%, and the inverted differential widened to 82 bps.

Euro Area

The Euro fell 0.19% to 1.069. In April 2023, retail sales in the Euro Area showed no change on monthly basis compared to March. By components, non-food trade experienced a slight increase of 0.5%, primarily driven by a significant 2.7% rise in online sales. However, sales of food, drinks, and tobacco decreased by 0.5%, and fuel trade declined by 2.3%.

On monetary policy, European Central Bank (ECB) President Christine Lagarde has stated that inflation pressures in the Euro Area continue to be significant, and further increases in borrowing costs will be implemented to address them. This announcement implies a possibility for another interest-rate hike at the upcoming meeting.

The UK

The British Pound was down 0.11% to 1.242. Retail sales experienced a 3.7% y/y growth in May 2023 (April 2023: 5.2% y/y). The rise in food prices led consumers to reduce their spending on non-essential items. May's growth rate was also the lowest in the past seven months. Grocery spending increased, likely influenced by the coronation bank holiday and other festivities.

Japan

The Japanese Yen weakened slightly by 0.04% to 139.63. In April 2023, average cash earnings in Japan increased by 1.0% y/y (March 2023: 1.3% y/y). Among the industries, real estate, goods rental, and leasing saw the largest contribution to the wage rise with a growth rate of 14.3%, followed by compound services (7.4%) and transport and postal activities (6.5%). However, when adjusted for inflation, real wages decreased by 3.0%, marking the thirteenth consecutive month of year-onyear declines. This decline in real wages is attributed to nominal pay growth falling behind consumer inflation.

China

The Yuan depreciated 0.22% to 7.118. Focus today will be on China’s trade numbers, where market consensus is expecting a contraction of 0.4% y/y for May 2023 (April 2023 actual: 8.5% y/y).

South Korea

The Won appreciated 0.77% to 1,298. President Yoon Suk Yeol of South Korea announced that the alliance between South Korea and the US has been elevated to a "nuclear-based alliance." This upgrade is a result of the agreement reached between President Yoon and President Joe Biden to enhance Washington's nuclear commitment to South Korea. The declaration includes measures to reinforce the U.S.'s commitment to defending South Korea through "extended deterrence," which encompasses the use of all available military capabilities, including nuclear weapons.

Australia

The Aussie gained 0.82% to 0.667 following Australia’s central bank move. The Reserve Bank of Australia (RBA) raised the cash rate by 25 bps to 4.10% in the latest meeting and the RBA indicated the possibility of further tightening. The decision comes as inflation in Australia has remained persistently high, while wage growth has also picked up. The RBA acknowledged increased upside risks to the inflation outlook, particularly driven by service price inflation.

Crude Oil

Oil prices traded in red as Brent fell 0.55% to US$76 per barrel while WTI shed 0.57% to US$71 per barrel as economic recession fears outweighed the tight supply prospect.

Gold

Gold climbed 0.08% to USD1,963/oz as investors await for further clues on Fed’s rate hike future path.

Malaysia Highlights

The Ringgit weakened 0.68% to 4.608. The Securities Commission (SC) Malaysia has approved a joint venture between Bursa Malaysia and RAM Holdings to manage and operate a new debt fundraising platform. This new platform will broaden the avenues for fund-fundraising for both listed and unlisted entities.

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 was on the front foot as it gained 0.14% to 1,383. Detailed transactions showed that the local institutions were the sole net buyers with RM83.1 million flow, while being offset by the net selling positions from local retailers (RM9.6 million) and foreign investors (RM73.5 million).

Source: AmInvest Research - 7 Jun 2023