Economy

US: Jobless claims rise slightly, near highest since Nov . Applications for US unemployment insurance rose slightly and held near the highest level since Nov, indicating continued easing in the labour market. Initial unemployment claims increased by 6,000 to 260,000 in the week ended July 30, Labor Department data showed. The figure matched the median estimate in a Bloomberg survey of economists. Continuing claims for state benefits climbed to 1.42m in the week ended July 23, the highest since early April. Jobless claims have been rising in the past few months as several companies — largely in the tech sector — announced layoffs and slow hiring amid economic uncertainty. The trend is likely to continue as the Fed strengthens its resolve to curb decades-high inflation with continued interest-rate hikes, which could lower demand for workers. (Bloomberg)

US: Trade deficit narrows more than expected amid jump in exports . Reflecting a jump in exports and a modest decrease in imports, the Commerce Department released a report showing the US trade deficit narrowed by more than expected in the month of June. The report showed the trade deficit narrowed to USD79.6bn in June from a revised USD84.9bn in May. Economists had expected the trade deficit to shrink to USD81.9bn from the USD85.5bn originally reported for the previous month. The US trade deficit has narrowed significantly since reaching a record high of USD107.7bn in March. The deficit for June is the smallest since it hit USD78.9bn in last Dec. The decrease in the size of the trade deficit came as the value of exports surged by 1.7% to USD260.8bn in June after jumping by 1.5% to USD256.5bn in May. (RTT)

EU: Germany factory orders fall less than expected in June . Germany factory orders declined less than expected in June as the fall in foreign demand was partially offset by the improvement in domestic orders, data published by Destatis showed. Factory orders decreased 0.4% on a monthly basis in June, after a revised 0.2% drop in May. Nonetheless, this was slower than the economists' forecast of -0.8%. Excluding major orders, new orders grew 0.4% from a month ago. The overall decline was mostly due to the 4.3% fall in orders from the non-euro area countries, while orders from the euro area climbed 3.4%. As a result, foreign demand was down 1.4%. On the other hand, domestic orders gained 1.1%. The producers of capital goods registered a decline of 1.8%. (RTT)

UK: BoE steps up tightening despite looming recession . The BoE raised its benchmark rate by half-a-percentage point and outlined plans to offload government bonds citing persistent inflationary pressures and the tight labor market conditions despite a looming recession. The Monetary Policy Committee of the central bank voted 8-1 to lift the bank rate by 50 basis points to 1.75%, the highest rate since Dec 2008. This was the sixth consecutive rate hike. Governor Andrew Bailey and seven other members preferred a 50 basis point increase, which is the biggest hike since the bank gained operational independence over the monetary policy from the British government in 1997. Policymaker Silvana Tenreyro, however, sought a quarter-point hike as she observed that the bank rate might already have reached the level consistent with returning inflation to the 2% target in the medium term. (RTT)

Australia: Central bank lifts rate by 50 bps . Australia's central bank raised its key interest rates again by 50bps in order to bring inflation back to the 2-3% target range. The policy board of the Reserve Bank of Australia, headed by Governor Philip Lowe, decided to lift the cash rate target by 50bps to 1.85%. This was the fourth consecutive rate hike. The latest outcome of the meeting came in line with economists' expectations. (RTT)

Taiwan: July exports seen growing at slower pace amid rising uncertainties . Taiwan's exports likely rose for the 25th straight month in July though at a slower pace than in June, amid fears of a global recession, uncertainties due to the Ukraine conflict and COVID-19 flare-ups in China, according to a Reuters poll. Taiwan, a global hub for chip production and a key supplier to Apple Inc, is one of Asia's leading exporters of technology goods, with the trade data seen as an important gauge of world demand for tech gadgets. Exports last month were estimated to have risen 11.65% from a year earlier, a Reuters poll of 10 analysts showed, slower than the 15.2% jump in June. The export forecasts ranged between 4.5% and 19.0% higher, reflecting uncertainties over the global economic recovery, supply chain disruptions due to pandemic lockdowns in eastern China and Russia's invasion of Ukraine. (Reuters)

Markets

Kelington: Bags contract worth RM117m. Kelington Group has bagged a RM117m contract from a customer in Singapore. The integrated engineering solutions provider said the contract involved undertaking bulk and speciality gas system distribution works for a world leader in innovative memory solutions’ fabrication facilities in Singapore. The contract commences this month and is expected to be completed by June 2024. (StarBiz)

TWL: To buy land in USJ, Putra Heights to develop affordable housing. TWL formerly known as Tiger Synergy, is buying three plots of freehold land in UEP Subang Jaya (USJ) and Putra Heights for RM45m. The vendors are INTA Development SB and Sime Darby Property (Bukit Raja) SB, a wholly-owned subsidiary of Sime Darby Property. (The Edge)

Ingenieur Gudang: Sells properties back to former shareholder for RM26m. Ingenieur Gudang, formerly known as Dynaciate Group, is selling two parcels of leasehold industrial land with buildings back to former shareholder Dynaciate Engineering Sdn Bhd (DESB) for RM26m. The sale proceeds will be mainly used to repay debts that the company owes to DESB. (The Edge)

HSS: MRT Corp appoints HSS JV as project management consultant for MRT3 project. MRT Corp has appointed the JV entity of HSS Integrated SB and HSS Engineering SB as the project management consultant (PMC) for the MRT3 project for a contract sum of RM997.9m. MRT Corp said the PMC was selected after an open tender exercise that saw the participation of 13 companies through five consortiums, and that the final selection was approved by the MRT3 One-Stop Procurement Committee chaired by the Finance Minister. (The Edge)

MR DIY: Earnings soar 64.59% in 2Q. MR DIY, which posted a record-high quarterly revenue of RM1.05bn in the April-June 2022 period, hinted that the operating environment may get tougher moving forward. Amid the expected impact of inflation and rising interest rates on disposable incomes, the group said it remained “cautiously optimistic” on its prospects. MR DIY said it planned to open 87 more new stores in the second half of this year. (StarBiz)

Malaysia Smelting Corp: 2Q profit jumps to RM39m on higher tin prices. Malaysia Smelting Corp's (MSC) second quarter net profit jumped by over 13 times to RM39.45m from RM2.93m a year earlier, on the back of higher revenue. Earnings per share for the quarter ended June 30, 2022 rose to 9.4 sen from 0.7 sen. Quarterly revenue rose 24.98% to RM408.84m from RM327.12m, underpinned by higher average tin prices. (The Edge)

Takaful Malaysi: 2Q net profit falls 15% to RM70m. Syarikat Takaful Malaysia Keluarga’s net profit in the 2Q fell 14.62% to RM69.62m, from RM81.54m a year earlier, on the back of higher gross benefits and claims. Earnings per share for the quarter ended June 30, 2022 dropped to 8.32 sen from 9.76 sen. (The Edge)

Market Update

The FBM KLCI might open flat today after oil prices slipped to their lowest level since February, and government bond yields fell, as a pessimistic forecast from the Bank of England added to concerns about the global economic outlook. Brent crude, the international oil benchmark, fell 2.8% to USD94.12 a barrel, bringing its declines for the week to more than 12%. The BoE on Thursday became the latest central bank to announce a bumper interest rate rise, lifting rates by 0.5 percentage points for the first time in 27 years. Despite the rate rise, yields on UK government gilts tumbled in the immediate aftermath of the announcement as investors bet that the worst squeeze in living standards in more than 60 years would force the central bank to limit further rate increases. Equity markets wavered amid the uncertain outlook and thin summer trading. The S&P 500 closed 0.1% lower, while the Nasdaq Composite gained 0.4%. The Nasdaq has added 15% since June 30, buoyed by strong tech sector earnings as well as predictions of lower interest rates that boost the valuations of higher growth companies. The rebound followed the worst first half of the year for US stocks in half a century. In Europe, the Stoxx Europe 600 rose 0.2%, led by shares of retailers and travel and auto companies.

Back home, Bursa Malaysia rebounded after two consecutive days of losses to close at its intraday high on Thursday, with the key index advancing 1.15% on strong buying interest, mainly driven by technology, telecommunications and healthcare counters. At 5pm, the FBM KLCI rose 17.14 points to reach its intraday high of 1,507.71 compared with Wednesday's close of 1,490.57. In the region, the Shanghai Composite Index rose 0.8%, recouping some losses sparked by tensions over Taiwan. Hong Kong’s Hang Seng Index rose 2.1%.

Source: PublicInvest Research - 5 Aug 2022