HEADLINES

Economy

US: Job openings rise slightly; labor market steadily easing. US job openings edged up in Feb, though labor market conditions are gradually easing in support of expectations that the Federal Reserve will start cutting interest rates by June. The Job Openings and Labor Turnover Survey, or JOLTS report, from the Labor Department showed there were 1.36 vacancies for every unemployed person in Feb, down from 1.43 in Jan. The decline in the vacancy-to-unemployment ratio reflected a spike in unemployment at the start of the year. (Reuters)

US: Fed officials say three rate cuts a reasonable baseline for 2024. Two Federal Reserve officials who vote on monetary policy decisions this year said they still expect the US central bank to cut rates three times in 2024, though they’re in no rush to begin lowering borrowing costs. San Francisco Fed President Mary Daly said the three rate cuts penciled in by Fed officials last month are a reasonable expectation, though there’s no urgency to make adjustments at the moment. Cleveland Fed President Loretta Mester, speaking to reporters after a separate event, said she still sees three rate cuts as likely appropriate this year, but that it’s a close call on whether fewer will be needed. (Bloomberg)

US: Factory orders increase solidly in Feb. New orders for US manufactured goods rebounded more than expected in Feb, boosted by demand for machinery and commercial aircraft as manufacturing regains its footing. Factory orders increased 1.4% after dropping 3.8% in Jan, the Commerce Department's Census Bureau said. Economists polled by Reuters had forecast orders rebounding 1.0%. (Reuters)

EU: German inflation lowest since early 2021. CPI in Germany slowed for a third straight month in March to its lowest level in nearly three years but core inflation remained high, thus complicating the picture for the ECB that is set to announce the latest rate decision next week and is facing calls for an interest rate cut, possibly in June. The CPI rose 2.2% YoY following a 2.5% increase in Feb, preliminary figures from the statistical office Destatis showed. (RTT)

EU: Poland's manufacturing conditions remain in contraction. Poland's manufacturing activity signaled a further marginal deterioration in March, survey data from S&P Global showed. The PMI rose to 48.0 in March from 47.9 in Feb. However, a PMI reading below 50 suggests contraction in the sector. During March, firms experienced lacklustre demand conditions at home and abroad, especially in Western European export markets. Manufacturing employment fell at the second-slowest pace in the past 22 months. Lower employment was linked to soft underlying demand. (RTT)

EU: Euro zone factory downturn deepened in March but some recovery signs, PMI shows. Overall manufacturing activity in the euro zone took a further turn for the worse in March, contracting at a steeper pace than in Feb, but there were signs of recovery in Italy and Spain, surveys showed. Demand continued to fall, according to the surveys which nevertheless demonstrated an uptick in optimism, suggesting the region may soon stage a wider recovery. (Reuters)

Japan: Monetary base gains 1.6% on year in March. The monetary base in Japan was up 1.6 % on year in March, the Bank of Japan said, coming in at 666.240trn yen. That was well shy of forecasts for an increase of 2.5% and down from the upwardly revised 2.4% gain in Feb (originally 2.1%). Banknotes in circulation were down 0.8% on year, while coins in circulation sank 1.8%. Current account balances added an annual 2.2%, including a 2.5% increase in reserve balances. The seasonally adjusted monetary base rose 3.6%. (RTT)

South Korea: Inflation adds 0.1% in March. Overall consumer prices in South Korea were up a seasonally adjusted 0.1% on month in March, Statistics Korea said. That was shy of expectations for an increase of 0.3% and down from 0.5% in Feb. On a yearly basis, inflation was up 3.1%, in line with expectations and unchanged from the previous month. Core CPI, which excludes the volatile costs of food, rose 0.1% on month and 2.4% on year, easing from 0.3% on month and 2.5% on year in Feb. (RTT)

India: Manufacturing growth hits 16-year high. India's manufacturing activity expanded at the fastest pace in sixteen years in March, underpinned by the quickest upturns in output and new orders, survey results from S&P Global showed. The seasonally adjusted HSBC Manufacturing PMI rose to 59.1 in March from 56.9 in Feb. A score above 50.0 indicates expansion. Both new orders and output grew at the steepest pace since Oct 2020. (RTT)

Markets

GFM: Wins Petronas contracts. GFM Services has secured three letters of appointment from the operating companies (OPCs) of Petroliam Nasional (PETRONAS) to deliver operations and maintenance services for three facilities at the Pengerang Integrated Complex in Johor. The jobs are for a period of three years, commencing on 15 March 2024 until 14 March 2027. The OPCs, namely PRPC Utilities and Facilities SB, Pengerang Power SB and PRPC Water SB, have the right to extend the tenure for a period of two years. (StarBiz)

DNeX: Secures three more North Sea oilfield licenses. Dagang NeXchange’s (DNeX) UK upstream oil and gas arm Ping Petroleum UK plc (Ping UK) has added three more North Sea oilfield licenses to its portfolio. The new fields bring Ping UK’s portfolio in the UK Continental Shelf to a total in excess of 100m of barrels of oil equivalent (MMboe) in the central North Sea. DNeX indirectly owns a 90% stake in Ping Petroleum, which wholly owns Ping UK. (The Edge)

TAS Offshore: Secures shipbuilding contracts worth RM15.3m. TAS Offshore has secured shipbuilding contracts worth RM15.3m for two tugboats with an existing customer from Indonesia. The vessels are expected to be delivered in 3Q 2025. The revenue generated from the contract is expected to contribute positively to the earnings and net assets of TAS Group for FY2026. In Jan, TAS had announced similar shipbuilding contracts worth a total of RM22.6m for three tugboats, also secured from an existing customer from Indonesia. (The Edge)

Uni Wall: Bags lands RM17m contract for Pavilion Damansara Heights project. Uni Wall Aps Holdings’ subsidiary, Uni Wall Architectural Products & Services SB has clinched a RM17.1m contract from WCT. The contract, spanning from 8 March 2024 to 31 Dec 2024 involves the design, supply, and installation of facade and aluminum works for Pavilion Damansara Heights (Parcel 2) mixed development in Kuala Lumpur. Uni Wall expects the contract to bolster its future earnings and plans to finance it through internal funds and external borrowings. (The Malaysian Reserve)

Sersol: Seeks to raise RM8.5m via private placement for working capital. Sersol is looking to raise up to RM8.5m via a private placement of 85m new shares or not more than 10% of its issued shares for working capital purposes. The issue price is set to be determined later. For illustrative purposes, however, the group has assumed an issue price of 10 sen per share, which represents a discount of 9.8% to the five-day volume weighted average market price of the shares. (The Edge)

Nestcon: To diversify into renewable energy sector. Nestcon plans to expand into the renewable energy (RE) sector, aiming to capitalise on Malaysia’s growing demand for clean energy. The proposed diversification includes activities such as solar PV systems installation and project management. Nestcon anticipates significant contributions from the RE business, potentially constituting 25% or more of its net profits and assets in the future. Shareholders will vote on the proposal at an upcoming EGM, with M&A Securities serving as the financial adviser. (The Malaysian Reserve)

MARKET UPDATE

The FBM KLCI might open lower today after the three major US stock indices fell about 1% on Tuesday and the yield on benchmark 10-year Treasuries hit a four-month high after data showing strong labour demand raised the prospect that the Federal Reserve could delay cutting interest rates. Bitcoin also fell, down 7.5% at one point, as risk assets took a beating on concerns that rate cuts may not come as soon as expected. US job openings, a measure of labour demand, edged up 8,000 to 8.756 million on the last day of February, the Labour Department's Bureau of Labour Statistics said. Data for January in the Job Openings and Labour Turnover Survey, or JOLTS, was revised lower to show 8.748m unfilled positions. MSCI's gauge of stocks across the globe closed down 0.49%, while on Wall Street, the Dow Jones Industrial Average fell 1%, the S&P 500 lost 0.72% and the Nasdaq Composite dropped 0.95%. Earlier in Europe, the pan-regional STOXX 600 index closed down 0.80% at a one-week low after hitting an all-time intraday high.

Back home, Bursa Malaysia climbed higher on Tuesday with consumer stocks leading the top gainer’s list. At closing, the benchmark FBM KLCI climbed 3.97 points, or 0.26% to 1,547.99, buoyed by gains in plantation and banking stocks. In the region, Japan’s Nikkei 225 rose 0.09% to 39,838.9, Hong Kong’s Hang Seng Index closed up 2.36% to 16,931.52 and China’s CSI300 Index declined 0.42% to 3,580.68. Elsewhere, South Korea’s Kospi advanced 0.19% to 2,753.16.

Source: PublicInvest Research - 3 Apr 2024