Biden aims to raise corporate tax
Fundamental outlook
US President Joe Biden plans to raise corporate tax to 28 per cent and doubts this will hurt economy. He furthers stressed that some top companies in Fortune 500 have not been paying taxes for the past years. US producer prices rose one per cent in March, exceeding forecast.
US weekly claims rose to 744,000 for the week ended April 3, citing a tough job market condition.
US Commerce Department on Thursday added seven Chinese supercomputing entities to the US economic blacklist, citing national security concerns. The blacklisted companies include Tianjin Phytium Information Technology, Shanghai High-Performance Integrated Circuit Design Center, Sunway Microelectronics, the National Supercomputing Center Jinan, the National Supercomputing Center Shenzhen, the National Supercomputing Center Wuxi, and the National Supercomputing Center Zhengzhou.
China’s producer price index (PPI) rose 4.4 per cent in April on an annual basis, the highest since July 2018. Nevertheless, China has reported a fall in labour as young people refrained from working blue collar jobs. Many manufacturers are preparing to automate the factories due to the aging population.
Germany is on the edge of announcing another national lockdown as the Covid-19 variant spreads rapidly.
The cabinet is considering importing Russia vaccines Sputnik as citizens are frustrated over the current progress of the vaccination effort. World Health Organisation says 87 per cent of the global vaccines supply have gone to higher-income countries.
Technical forecast
US dollar/Japanese yen saw support at 109 and rebound on Friday. We will remain conservative and predict the range to be contained from 109 to 110.50. Mixed trading is expected with sideways trend as the market has not revealed a clear direction in the dollar index.
Euro/US dollar hovered at 1.19 while the trend stayed in uncertainty. We forecast the range will be contained from 1.18 to 1.12. Risk control is recommended in case the price movement goes beyond the aforementioned range.
British pound/US dollar is prone to a bear trend as the market closed at 1.37 on Friday. The trend might be trapped within 1.36 to 1.38 with selling interest emerging at the topside. Trading below 1.3650 is a sign of a new bear trend and prone to break the 1.36 support.
WTI Crude prices traded beneath US$60 per barrel almost throughout the week. The market has been inactive and waiting for a clear direction on any fundamental changes. We retain our view on the market range until the price steps out from US$59 to US$62 per barrel.
Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in exhaustion last week and closed slightly higher on a weekly basis. June Futures contract settled at RM3,767 per metric tonne on Friday. The trend is prone to a drawdown with a target at RM3,600 per metric tonne. Resistance lies at RM3,800 per metric tonne in case of an initial pull-up and swing trades are expected in the market.
Gold prices were temporary capped at US$1,760 per ounce. The market is still vying with US stock indexes for an up-run. We foresee the trend could be contained from US$1,720 to US$1,760 per ounce. The bulls need to gather more strength in order to protrude above US$1,760 per ounce. The sideways trend is more likely to occur this week.
Silver prices hit US$25.50 per ounce resistance before the weekend close. We presume there might be a sideways correction while ranging from US$24 to US$25.50 per ounce. There is not much change in our technical view on silver prices but the market needs to gather more strength before the next run-up.