Malaysia and global market summary for April 2024.
World Updates
China's economic data for January-February 2024 surpassed expectations across several key indicators. Retail sales grew by 5.5% year-on-year, beating forecasts of 5.2%. Industrial production (IP) increased by 7.0% year-on-year. Fixed asset investments rose by 4.2%, outperforming forecasts of 3.2%
The Bank of Japan (BoJ) made significant changes to its monetary policy, abandoning its negative interest rate policy by raising the overnight lending rates to 0% - 0.1%, a slight increase from the previous range of -0.1% to 0%.
The US Federal Reserve opted to maintain its current interest rates unchanged, citing concerns over a softening job market.
The collapse of Baltimore's Francis Scott Key Bridge may impact trade in the Asia-Pacific region. The incident, which involved a container ship colliding with the world's third-longest truss bridge, is expected to have a significant impact on the automotive sector and coal markets
The number of rig counts dropped by 5 to a total of 624, which is 18% lower than last year & the lowest since mid-January 2022. This decrease in rig count indicates less activity in extracting oil and gas. As a result, gas production in major shale basins is expected to decline to a 3-month low
Malaysia Economy Updates
Bank Negara Malaysia (BNM) decided to maintain the Overnight Policy Rate (OPR) at 3%.
The Malaysian ringgit slightly gained ground against the US dollar, reversing its trend after being overvalued for a period. This gain halted a two-day streak of consecutive gains, as the market exercised caution ahead of the release of US inflation data
The government and BNM are continuing to take various remedial measures to strengthen the value of the ringgit, including ensuring that the domestic foreign exchange market remains in order
Inflation crept up to 1.8% from 1.5% possibly from spending increase with the new school term & SST increase
The expected High-Value Goods Tax (HVGT) has been put on hold from its May 1 implementation
US Updates
The Magnificent 7, defined as Apple, Alphabet, Amazon, Meta, Microsoft, Nvidia and Tesla have seen a “magnificent” run fueled by AI optimism over the past fourteen months.
Although now, 4 is performing with 3 down with Alphabet (down 2% year-to-date through Monday), Apple (down 6%) and Tesla (down 20%) have wildly underperformed the market, while Nvidia (up 60%), Meta (up 36%) Amazon (up 15%) and Microsoft (up 9%) have all outrun the broader market
The positions in US real estate, infrastructure, and base metals positions are mostly driven by their ability to hedge long-run inflation. The positions in inflation-linked bonds and gold not only help to hedge against inflation but also provide a higher diversification benefit relative to other asset classes
Each of the 3 main U.S. indexes recorded solid quarterly gains, led by a climb of 10.16% for the S&P 500, aided by optimism over artificial intelligence (AI) related stocks and expectations the U.S. Federal Reserve will begin to cut interest rates this year
High-quality companies in the United States are anticipated to fare relatively better amid ongoing interest rate hikes, primarily due to their reduced reliance on domestic borrowings
China Update
The Industrial and Commercial Bank of China (ICBC) said it will support moves underway to stabilise its property market.
The Hang Seng Index closed 0.9% higher at 16,541.42, leading to a 0.2% gain for March. Hong Kong's market will be closed on Friday and Monday for holidays, but China's market will remain open. The Hang Seng Tech Index rose by 2.5%, and the Shanghai Composite Index went up by 0.6%.
Cautious but based on the Chinese GDP actual historically on track with the forecast
Consumer price index (CPI) grows by 0.7% year on year in February, beating forecasts and marking the first rise following 6 months of decline
Alternative Investments
Gold price rallied during the North American session on Thursday and hit a new all-time high of $2,225 in the mid-North American session
Oil prices rose by more than $1 a barrel on Thursday, after falling for two consecutive sessions, on the prospect of supplies given the OPEC+ producer alliance is widely expected to stay the course on its current production cuts
Cryptocurrencies bounced back on 27 March, recovering much of the losses from the previous day’s sell-off, which came soon after Bitcoin hit an all-time high
Ethereum price remains stable, being able to hold USD3,400 support
2024 April Market Outlook Update
Global markets are anticipating that inflation has reached its peak, thanks to actions by central banks worldwide and the delayed impacts of monetary policy. This anticipation suggests that inflation rates may decrease, potentially leading to rate cuts, though it could also bring about investment volatility. It's important to recognize that volatility is normal, and pullbacks are healthy in the investment landscape with elections in India, the US, and other countries, if lesser than anticipated 3 rate cuts in the US. Therefore, it's advisable to diversify investments, especially into promising areas of the global economy equities, and alternative investments.