HEADLINES

Economy

US: Powell reiterates Fed needs more confidence on inflation to cut. Fed Chair Jerome Powell reiterated to lawmakers that the US central bank is in no rush to cut interest rates until policymakers are convinced, they have won their battle over inflation. In testimony before a House panel, the Fed chief said it will likely be appropriate to begin lower borrowing costs at some point this year, but made clear officials are not ready yet. The remarks echoed a consistent message from nearly every Fed official in recent weeks, the economy and labor market are strong, meaning policymakers have time to wait for more evidence that inflation is headed back to their goal before cutting rates. (Bloomberg)

US: House approves spending bill to avert government shutdown. The Republican-controlled US House of Representatives passed legislation funding a broad swath of the federal government through the fiscal year that began in Oct, as yet another threat of a partial shutdown looms. The House voted 339- 85 for the bill with 83 Republicans in opposition. It now goes to the Senate for passage by Friday, before a midnight deadline when temporary funding expires for several Washington agencies. This 1,050-page cluster of bills would keep programs running at huge federal bureaucracies, including the departments of Agriculture, Justice, Transportation and Housing and Urban Development. Also affected are construction projects at military bases and care for veterans. (Reuters)

US: Labor market steadily easing as job openings, resignations decline. US job openings fell marginally in Jan, while the number of workers quitting their jobs dropped to a three-year low, indicating that labor market conditions were gradually easing. The decline in resignations, which pushed the quits rate to the lowest level in 3-1/2 years, over time bodes well for slower wage inflation and overall price pressures in the economy. There were 1.45 jobs for every unemployed person in Jan up from 1.42 in Dec, indicating the labor market remains strong. This is well above the average of 1.2 during the year before the Covid-19 pandemic. The JOLTS data signal that the jobs market is slowly settling down, consistent with wage, and thus inflation, pressures cooling without a worrisome slowdown in net job creation and overall economic activity. (Reuters)

EU: Ireland jobless rate falls to 4.2%, lowest in 9 months. Ireland's unemployment rate decreased in Feb to the lowest in nine months, preliminary data from the Central Statistics Office showed. The seasonally adjusted unemployment rate dropped to 4.2% in Feb from 4.5% in the previous month. In the corresponding month last year, the rate was 4.1%. Moreover, this was the highest jobless rate since May 2023, when it was 4.2%. The seasonally adjusted number of unemployed decreased to 119,300 in Feb from 129,800 in Jan. A year ago, it was 112,800. Ireland's youth unemployment rate, which applies to the 15-24 age groups, dropped to 10.5% from 11.7%. (RTT)

EU: German trade surplus rises on robust rebound in exports. Germany's trade surplus increased at the start of the year as exports rebounded more than expected, providing a glimpse of hope to an otherwise weak economy. Exports posted a monthly growth of 6.3% in Jan after falling 4.5% in the previous month, data released by Destatis showed. This was also far better than economists' forecast of a 1.5% increase. Imports advanced 3.6% MoM, in contrast to the 6.7% decrease in Dec. They were expected to rise moderately by 1.8%. Driven by the notable increase in exports, the trade surplus rose to EUR27.5bn from EUR23.3bn in Dec. The expected surplus was EUR21.5bn. (RTT)

UK: Construction downturn softens to near stabilization. The downturn in UK construction activity eased in Feb amid improved demand conditions, survey results from S&P Global showed. The PMI rose to 49.7 in Feb from 48.8 in Jan. The score was expected to increase to 49.0. However, any score below 50 indicates contraction in the sector. Feb saw a near-stabilization of business activity across all three main categories of construction. The house building saw the biggest turnaround since Jan. New orders grew for the first time in seven months in Feb, though marginally. The recovery in new business was attributed to a turnaround in tender opportunities and greater client confidence, especially in the housebuilding segment. (RTT)

Australia: Economy slows to a crawl, underscoring case for rate cuts. Australia's economy grew at a snail's pace in the Dec quarter as a punishing squeeze on household incomes brought consumer spending to a standstill, reinforcing market bets that the next move in interest rates will be down. The slowdown confirmed high borrowing costs were working all too well to curb demand, prompting treasurer Jim Chalmers to declare that the balance of risks in the economy is shifting from inflation to growth. Data from the Australian Bureau of Statistics showed real GDP rose 0.2% in the fourth quarter, under forecasts of 0.3%. (Reuters)

Markets

MMAG: Forms JV for seafood transshipment hub in KLIA. The aviation division of MMAG Holdings, MMAG Aviation Consortium SB’s subsidiary, Oceanic Transshipment SB has formed a strategic JV with Macau's Asia Express Ltd and Suniao Supply Chain SB for the oceanic transshipment hub it has set up in the Cainiao Aeropolis eWTP Hub at KLIA. Asia Express, which is primarily a cargo sales agent for airfreight companies operating in China and Malaysia, is taking up a 20% stake in the hub, while Suniao will hold 10%. (The Edge)

Globetronics: Inks RM36m technology provision agreement with Kaynes Semicon. Globetronics Technology’s (GTB) wholly owned subsidiary, ISO Technology SB, has entered into a technology provision agreement with India-based Kaynes Semicon Private Limited valued at USD7.6m or approximately RM35.9m. The deal involves ISO Tech providing technical services for outsourced semiconductor assembly & testing (OSAT) business to Kaynes Semicon. Additionally, ISO Tech plans to reinvest USD5.3m or about RM25m net of taxes into Kaynes Semicon’s securities, subject to the completion of milestones. (The Malaysian Reserve)

Perdana Petroleum: Secures RM68m PCSB contracts. Perdana Petroleum (PPB) through its wholly owned subsidiary, Perdana Nautika SB (PNSB), has secured five job wins from Petronas Carigali SB (PCSB) with a cumulative value of RM68m. The offshore support vessel operator said four of the jobs were contract extensions and one was a new job for the provision of anchor handling tug and supply vessels (AHTS). Out of the four contract extensions, three were for AHTS while the other was for an accommodation work barge (AWB). (StarBiz)

Awantec: Wins RM5m contract from National Water Research Institute of Malaysia. Awanbiru Technology’s (Awantec) wholly owned unit has secured a RM5m contract from the National Water Research Institute of Malaysia's (Nahrim) computing solutions and services for climate change research and development. The contract focuses on the implementation of high-performance computing solutions to run Weather Research and Forecasting (WRF) models in the cloud computing environment. The contract spans 30 months, running from 8 March this year until its expiry on 7 Sept 2026. (The Edge)

Econpile: Gets RM65.5m road upgrade job in Cameron Highlands. Econpile Holdings has received a letter of award from Ahmad Zaki Resources to undertake road upgrade works at Cameron Highlands, Pahang, for RM65.5m. The project shall be completed within 33 months from 2 Jan 2024. The project is expected to contribute positively to the revenue and earnings of the company from the financial year ending 30 June 2024 onwards. (StarBiz)

Jati Tinggi: Secures RM22m data centre underground cable job. Jati Tinggi Group’s wholly owned subsidiary Jati Tinggi Holding SB has secured a RM22.1m job to lay underground cables for a data centre in the southern region of Peninsular Malaysia. Jati Tinggi received the contract from Worktime Engineering SB.The nature of the contract is to lay a 275kV underground cable double circuit for a data centre. The scope of works includes the erection of power cables, fibre optic cables, joint and termination works, together with other ancillary works. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher as Wall Street's main indices rose overnight after Federal Reserve Chair Jerome Powell in prepared remarks ahead of his congressional testimony said the central bank expects to reduce its benchmark interest rate later this year. Powell said today that inflation had "eased substantially" since hitting 40-year highs in 2022, but that policymakers still needed "greater confidence" in its continued decline before cutting rates. The remarks came ahead of his testimony to the House Financial Services Committee later in the day. February's nonfarm payrolls report due on Friday is expected to offer further clarity on the state of the labour market. The Dow Jones Industrial Average rose 75.86 points, or 0.20%, to 38,661.05. The S&P 500 gained 26.11 points, or 0.51%, at 5,104.76 and the Nasdaq Composite added 91.96 points, or 0.58%, at 16,031.54. The pan-European STOXX 600 index rose 0.39% and MSCI's gauge of stocks across the globe gained 0.59%.

Back home, Bursa Malaysia continued to decline to close lower for a second consecutive day on Wednesday in lacklustre trading as investors took profits after the recent rally against the backdrop of significant data releases and economic meetings this week. At the closing bell, the FBM KLCI slid 5.47 points to 1,531.51 from Tuesday's close of 1,536.98. In the region, the Hang Seng Index rose 1.7%, while the CSI 300 eased 0.4%.

Source: PublicInvest Research - 7 Mar 2024