Economy

US: Unemployment rate drops to 3.6% as labour market rapidly tightens. US employers maintained a brisk pace of hiring in March, driving the unemployment rate to a new two-year low of 3.6% while also boosting wages, resulting in a further tightening of labour market conditions and opening the door to a hefty 50 basis points interest rate hike from the Fed in May. The Labour Department's closely watched employment report also showed more people joining the workforce, likely attracted by the higher wages. (Reuters)

US: Auto sales slide in Q1, Toyota outsells GM. US automakers reported a slump in first-quarter domestic sales, as the entire industry was slammed by chip shortages and disruptions to supply chains. Toyota, which in 2021 upstaged GM as the top-selling automaker in the US, outsold the company in the first quarter on increased demand for its Lexus hybrid and electric vehicles. (Reuters)

US: Construction spending slows in Feb. US construction spending rose less than expected in Feb as an increase in outlays on private projects was partially offset by a decline in government spending. The Commerce Department said that construction spending climbed 0.5%. Data for Jan was revised higher to show construction outlays advancing 1.6% instead of 1.3% as previously reported. Economists polled by Reuters had forecast construction spending rising 1.0%. (Reuters)

EU: Eurozone inflation surges to record 7.5% as energy prices soar. Eurozone inflation rocketed in March to set a new record as Russia's invasion of Ukraine drove energy prices higher, thus adding pressure on the ECB to tighten policy earlier than planned. Consumer price annual inflation jumped to 7.5% from 5.9% in Feb, preliminary data from the statistical office Eurostat showed. Economists had forecast 6.6% inflation. (RTT)

EU: Eurozone manufacturing growth slows amid geopolitical tensions. Eurozone manufacturing sector registered its slowest growth in 14 months in March as geopolitical tensions weighed on demand and confidence, final survey results from S&P Global showed. The manufacturing Purchasing Managers' Index fell to 56.5 in March from 58.2 in Feb. The score was also below the flash estimate of 57.0. This was the slowest growth faced by producers since the beginning of 2021. (RTT)

UK: Manufacturing activity growth moderates in March. The UK manufacturing activity growth moderated notably in March, reflecting the on-going supply shortages, greater caution among clients, escalating inflationary pressures and geopolitical tensions, final survey data from S&P Global showed. The S&P Global/ Chartered Institute of Procurement & Supply manufacturing Purchasing Managers' Index slid to 55.2 in March from 58.0 in Feb. (RTT)

China: Manufacturing contracts on tight restrictions. China's manufacturing sector contracted notably in March due to the tight restrictions imposed to contain the spread of the latest wave of the coronavirus, survey results from S&P Global showed. The Caixin Purchasing Managers' Index fell to 48.1 in March from 50.4 in Feb. The pace of decline was the quickest seen since Feb 2020. A score below 50.0 indicates contraction. (RTT)

Markets

Axiata (Neutral, TP: RM4.30), Digi (Neutral, TP: RM4.05): Celcom, Digi asked to address MCMC’s preliminary competition concerns in merger assessment. The Malaysian Communications and Multimedia Commission (MCMC) has raised preliminary concerns about market competition that could arise from the proposed merger of the telco operations of Celcom Axiata and Digi.Com, and asked the two parties to submit comments, information and remedies on its assessment. (The Edge)

Comments : The Malaysian Communications and Multimedia Commission (MCMC) has raised concerns about market competition that could arise from the proposed merger of Celcom and Digi, and asked the two parties to submit comments, information and remedies on its assessment. For now, the key hurdle of the proposed merger is obtaining regulatory approvals. Once approval is given by the MCMC, it should take approximately a month’s time for the merger to complete. Earlier, both parties were targeting the merger to complete by the second quarter of 2022. Following this request by the MCMC to submit merger assessment, we do not rule out the possibility of a delay in the finalization of the proposed merger. At this juncture, we maintain our Neutral rating on Digi and Axiata.

Sapura Energy (Trading Sell, TP: RM0.03): Gets deferment to service RM10.3bn facilities. Sapura Energy has secured a temporary deferment from lenders for outstanding interest and coupon payments for its RM10.3bn multi-currency financing (MCF) facilities. (The Edge)

JAG: Bags BNM contract to melt cupronickel, nickel raw materials as scrap. JAG has entered into an agreement with Bank Negara Malaysia (BNM) for the purchase and meltdown of cupronickel and nickel raw metals as scrap from the central bank. The total value of the agreement is “significant” in terms of the procurement value to the company for the financial year ending 31 Dec 2022. (The Edge)

Majuperak: Seeks 12-month extension to submit regularisation plan. Majuperak Holdings has submitted an application to Bursa Malaysia Securities for an extension of time of 12 months up to 11 April 2023 to submit its regularisation plan to the relevant authorities. (The Edge)

TWL Holdings: Inks MoU with Tatra Investment to penetrate in healthcare sector in Malaysia, SEA. TWL Holdings (TWL) has entered into a memorandum of agreement (MoA) with Tatra Investment LLC to penetrate the healthcare sector in Malaysia and Southeast Asia. (BTimes)

Resintech: Undertakes bonus issue exercise to reward shareholders. Resintech has undertaken a bonus issue exercise of up to 50.308m new ordinary shares on the basis of one bonus share for every three existing Resintech shares. (BTimes)

Minetech: Secures RM4.4m contract from GLM Emerald. Minetech Resources has secured a construction contract worth RM4.4m from GLM Emerald Square (Cheras). (StarBiz)

Market Update

The FBM KLCI might open higher today after the benchmark S&P 500 and the technology-heavy Nasdaq Composite inched into positive territory after closing out their worst quarter in two years. The S&P dropped almost 5% in the first three months of 2022 and the Nasdaq fell 9.1%. The Dow Jones Industrial Average rose 139.92 points, or 0.4%, to 34818.27, while the S&P 500 climbed 15.45 points, or 0.3%, to 4545.86 and the Nasdaq Composite added 40.98 points, or 0.3%, to 14261.50. All three indices started the day higher, edged lower in midday trading as yields on government bonds surged, then climbed again to end the day in the green. In Europe, the regional Stoxx 600 index, which shed almost 7% in the first quarter, closed the day 0.5% higher. Germany’s Dax added 0.2% and London’s FTSE 100 rose 0.3%. Friday’s data showed that the US had recorded another month of strong jobs growth in March, adding 431,000 positions. That figure compared with a Reuters forecast of 490,000 and marked a decline from February’s revised figure of 750,000.

Back home, Bursa Malaysia recouped early losses to close at its intraday high on Friday, with the key index advancing 0.95% on strong buying interest, mainly driven by selected heavyweights in financial services as well as industrial products and services counters. At 5pm, the benchmark FBM KLCI rose 15.05 points to 1,602.41 from 1,587.36 at Thursday's close. In the region, China’s Shanghai Composite Index rose 0.9%, Hong Kong’s Hang Seng edged up 0.2% and Japan’s Nikkei 225 slipped 0.6%.

Source: PublicInvest Research - 4 Apr 2022