Economy

US: Labour market shrugs off Omicron surge, economy strong ahead of rate hikes. The US economy created far more jobs than expected in Jan but despite the disruption to consumer-facing businesses from a surge in COVID-19 cases, pointing to underlying strength that should sustain the expansion as the Fed starts to raise interest rates. The Labour Department's closely watched employment report also showed a whopping 709,000 more jobs were added in Nov and Dec than previously estimated. Wage gains accelerated last month and the labour pool expanded. The upbeat report ended days of anxiety among economists and White House officials who had frantically tried to prepare the nation for a disappointing payrolls number. (Reuters)

EU: Banks expect ECB rate at 0% by year-end after hawkish turn. Investment banks brought forward their calls on ECB interest rate hikes after a hawkish turn from the ECB that opened the door to the possibility of increased borrowing costs this year. With euro zone inflation at a record high in Jan, ECB President Christine Lagarde declined to repeat her past comment that a 2022 rate hike was very unlikely at a news conference following the bank's policy meeting. Sources told Reuters after the meeting that a decision to dial back stimulus now looked likely in March, starting with a faster than-expected wind-down of the bank's bond purchases, which according to ECB guidance need to end before rate hikes. (Reuters)

EU: Eurozone retail sales fall more than expected. Eurozone retail sales declined more than expected in Dec, data from Eurostat revealed. Retail trade decreased 3% MoM, in contrast to the 1% increase in Nov. This was the first fall in five months and much bigger than the economists' forecast of -0.5%. Sales of food, drinks and tobacco were down 0.3%, and non-food product sales declined more sharply by 5.2%. At the same time, automotive fuel in specialized stores grew 0.1%. On a yearly basis, retail sales advanced 2.0%, which was weaker than November's 8.2% surge and the expected growth rate of +5.1%. (RTT)

EU: German construction sector expands in Jan. Germany's construction sector expanded in Jan, survey results from IHS Markit showed. The construction Purchasing Managers' Index rose to 54.4 in Jan from 48.2 in Dec. This was the strongest growth since Feb 2020. A score above 50.0 indicates expansion in the sector. Among the three categories, work on residential projects increased sharply to the greatest extent since Jan 2018. Both the commercial activity and civil engineering rose slightly. New work inflow expanded in Jan and new orders accelerated. Employment increased for the fifth month in a row in Jan, with the rate of job creation quickest since Feb 2020. (RTT)

EU: Germany factory order growth exceeds expectations. Germany's factory orders growth exceeded expectations in Dec underpinned by robust domestic demand, data from Destatis revealed. Factory orders grew 2.8% on a monthly basis, but slower than the 3.6% expansion seen in Nov. Economists had forecast the growth rate to ease sharply to 0.5%. This was the second consecutive rise in orders. Excluding major orders, factory orders were up 2.9%. On a yearly basis, growth in new orders accelerated to 5.5% from 2.3% in the previous month. Domestic orders were up 11.7%, while foreign orders dropped 3% from the previous month. Within foreign demand, incoming orders from the euro zone fell 4.2% and that from the rest of the world decreased 2.3%. (RTT)

UK: Construction sector expands at fastest pace in 6 months. The UK construction sector expanded at the fastest pace in six months in Jan, IHS Markit showed. The Chartered Institute of Procurement & Supply construction Purchasing Managers' Index rose to 56.3 in Jan from 54.3 in Dec. A score above 50.0 indicates expansion in the sector. The index registered above the crucial 50.0 no-change mark for the twelfth month in a row. The latest reading signalled the strongest rate of output expansion since July 2021. Commercial work was by far the best-performing category with growth accelerating to a six-month high. The index rose to 57.6. (RTT)

Australia: Central Bank raises inflation outlook. The Reserve Bank of Australia raised its inflation outlook citing robust demand for housing and the increases in prices of durable goods and fuel. In the latest Statement on Monetary Policy, the central bank said underlying inflation picked up in recent quarters and is forecast to increase further to 3.25% in mid-2022, largely reflecting upstream cost pressures amid strong demand in housing construction and the durables goods sector. The outlook for mid-2022 was revised up from 2.25% estimated previously. Inflation is forecast to remain in the top half of the 2% to 3% target range with a steady pick-up in labour costs in response to strong labour market conditions. (RTT)

Singapore: Retail sales growth improves in Dec. Singapore retail sales growth improved in Dec, data from the Department of Statistics showed. Retail sales rose 6.7% YoY in Dec, following a 2.2% increase in Nov. Motor vehicle sales declined 7.2% annually in Dec, following a 12.3% fall in the previous month. Excluding motor vehicles, retail sales grew 8.6% yearly in Dec, after a 4.5% gain in the preceding month. Sales of petrol service stations rose 23.6% annually in Dec and those of watches and jewellery increased 27.4%. On a monthly basis, retail sales rose 2.3% in Dec, after a 2.8% growth in the prior month. (RTT)

Philippines: Inflation lowest since Nov 2020. The Philippines' inflation eased for the fifth consecutive month in Jan to the lowest since Nov 2020, data from the Philippine Statistics Authority showed. The CPI rose 3.0% annually in Jan, after a 3.2% increase in Dec. Economists had expected a 3.1% rise. A similar lower rate of inflation was seen in Nov 2020. The statistical office attributed the latest easing in headline inflation to the slower annual increase in housing, water, electricity, gas and other fuels at 4.5% versus 5.1% in Dec. (RTT)

Markets

Hibiscus (Outperform, TP: RM1.05): Gets permit for Aussie exploration. Hibiscus Petroleum has secured a VIC/P79 exploration permit for offshore Otway Basin in Australia from National Offshore Petroleum Titles Administrator. The 2,576 square km permit is located next to the largest gas fields in the offshore Otway Basin, Thylacine and Geographe which contains the highly prospective Vanguard Prospect. (StarBiz)

Sapura Energy (Neutral, TP: RM0.05): Pulls out from Taiwan offshore wind farm project. Loss-making Sapura Energy has decided to withdraw from the Yunlin offshore wind farm installation project in Taiwan following a "material breach of contract". The oil and gas group has issued a notice to Yunneng Wind Power Co to terminate the contract for the transportation and installation of monopiles at the farm. The group has an immediate right to legally and contractually terminate the contract as advised by its external international lawyers. (The Edge)

Caely: Lingerie maker Caely Holdings to set up JV in Indonesia to ramp up production. Main market-listed Caely Holdings hopes to set up a joint-venture (JV) in Indonesia this year to increase its production capacity to cater to the growing global demand for lingerie. The company is currently in the midst of finalising the terms and conditions of the agreement with a potential JV partner, that would then invest in a plant in the republic. (The Edge)

Cuscapi: Acquired 0.2% stake in MYEG over past year. Cuscapi has acquired a total of 15.98m shares or a 0.215% stake in MY EG Services (MYEG) for RM15.01m over the past year. The aggregate purchase consideration of quoted securities by the group within the preceding 12 months exceeded 5% of its latest audited consolidated net assets. It added that the RM15.1m aggregate consideration for MYEG shares accounted for 24.21% of Cuscapi's latest audited consolidated net assets. (The Edge)

Muhibbah: Gets leave from Federal Court to proceed with judicial review of additional RM23m tax imposed by IRB. The Federal Court has given its nod for Muhibbah Engineering (M) to proceed with the judicial review in relation to a notice of additional tax assessment issued by the Inland Revenue Board of Malaysia (IRB). The court unanimously granted affirmation to the Court of Appeal's decision on 19 July 2021 in respect of granting leave and proceeding with the judicial review hearing, and also issued a stay order in favour of the company until the substantive judicial review hearing is concluded. (The Edge)

Affin Banking Group: To transfer controlling stake in Affin Hwang AM to CVC Capital Partners Asia Fund. Affin Banking Group has agreed to transfer its controlling stake in Affin Hwang Asset Management to CVC Capital Partners Asia Fund V. (BTimes)

Toyo Ventures: Submits FY21 annual report to Bursa, averts trading suspension. Trading in the securities of Toyo Ventures Holdings (TVHB) will not be suspended on 10 Feb, as the company managed to submit its annual report for the financial period ended 30 Sept 2021to Bursa Malaysia. (The Edge)

Market Update

US markets continued to recover from the rout in January, gaining for a fifth day in the last six as strong earnings reports and a better-than-expected January jobs report helped the major indices end higher last Friday. The S&P 500 and Nasdaq Composite gained 0.5% and 1.6% respectively, though the Dow Jones Industrial Average ended largely unchanged. The coming week will see the likes of Disney and Coca-Cola reporting earnings while on the data front, consumer price index and consumer sentiment numbers will be released. Over in Europe, markets ended lower as the European Central Bank kept interest rates unchanged the day before, even amid record inflation levels across the continent. Retail sales in the euro zone saw a 3% MoM decline in December meanwhile. Germany’s DAX slumped 1.8%. France’s CAC 40 and UK’s FTSE 100 fell 0.8% and 0.2%. Asian markets were mostly higher with Hong Kong leading gainers in the region. The Hang Seng Index jumped 3.2% higher after re-opening from the Lunar New Year holidays. The Nikkei 225 recovered from earlier losses to close 0.7% higher. China remained closed for the Lunar New Year holidays, but it is set to re-open later today.

Source: PublicInvest Research - 7 Feb 2022