HEADLINES

Economy

US: Powell says Fed has time to assess data before deciding to cut. Federal Reserve Chair Jerome Powell signaled policymakers will wait for clearer signs of lower inflation before cutting interest rates, even though a recent bump in prices didn’t alter their broader trajectory. Powell said recent inflation figures, though higher than expected, did not materially change the overall picture. He reiterated his expectation that it will likely be appropriate to begin lowering rates at some point this year. The FOMC held interest rates steady last month. (Bloomberg)

US: Service sector expands moderately in March; price pressures easing. US services industry growth slowed further in March, while a measure of prices paid by businesses for inputs dropped to a four-year low, which bodes well for the inflation outlook. The Institute for Supply Management (ISM) said that its non-manufacturing PMI fell to 51.4 last month from 52.6 in Feb. It was the second straight monthly decline in the index since rebounding in Jan. A reading above 50 indicates growth in the services industry, which accounts for more than two-thirds of the economy. (Reuters)

US: Crude oil inventories unexpectedly show another jump. Crude oil inventories in the US unexpectedly saw another significant increase in the week ended March, according to a report released by the Energy Information Administration. The EIA said crude oil inventories shot up by 3.2m barrels last week, matching the surge seen in the previous week. The continued increase surprised economists, who had expected crude oil inventories to fall by 1.5m barrels. At 451.4m barrels, US crude oil inventories remain about 2% below the five-year average for this time of year, the EIA said. (RTT)

EU: Inflation adds to chances of rate cut in June. Eurozone CPI as well as core price growth softened in March raising the likelihood of an interest rate cut by the ECB in June, which would mark an end to the aggressive tightening cycle seen in the past few years. The harmonized index of consumer prices registered an increase of 2.4% annually, slower than the 2.6% rise in Feb, flash data from Eurostat showed. Prices were forecast to climb 2.5%. (RTT)

EU: Italy unemployment rate rises in Feb. Italy's unemployment rate rose to a three-month high in Feb, the statistical office ISTAT reported. The jobless rate advanced to 7.5% in Feb, while it was expected to fall to 7.2%. The rate was 7.3% in both Jan and Dec. In Feb 2023, the unemployment rate stood at 7.8%. At the same time, the employment rate edged up to 61.9% in Feb from 61.8% in the previous month. The youth unemployment rate climbed to 22.8% in Feb from 22.1% a month ago, data showed. (RTT)

EU: Austria inflation remains above 4%. Austria's CPI eased slightly in March, but the figure remained above 4% which is nearly double the 2% target of the ECB. The CPI rose 4.2% YoY following a 4.3% increase in Feb, preliminary estimates from Statistics Austria showed. Feb's rate was the lowest since Dec 2021. Inflation, based on the harmonized index of consumer prices or HICP, was steady at 4.2%. Consumer prices rose 0.5% MoM as measured by the CPI, after a 0.7% increase in Feb. (RTT)

China: Service sector logs faster growth. China's service sector expanded at a faster pace in March with rising new business and improving confidence, survey results from S&P Global showed. The Caixin service sector PMI, rose to 52.7 in March from 52.5 in Feb. The score signaled an increase in services activity for the fifteenth successive month. The rate of expansion was faster but it remained below the long-run series average. The pace of increase in business activity accelerated mainly due to the improvement in new business and rising business sentiment. New business grew at the fastest pace since last Dec. (RTT)

Japan: BOJ is likely to wait until fall on next hike, ex-board member says. The BoJ is likely to wait until autumn before mulling whether to raise interest rates again after successfully negotiating the tricky task of backing away from its massive stimulus program, according to a former policy board member. Governor Kazuo Ueda and his fellow board members will likely wait until around the Oct policy meeting to decide whether the economy can withstand another rate increase, said Sakurai, who stays in touch with incumbent BOJ officials. A steady policy normalization process will probably start next year, with potentially a 25bps rate increase every six months. (RTT)

Markets

MN Holdings: Bags RM17.6m contract from TNB. MN Holdings’ subsidiary, MN Power Transmission SB, has bagged a RM17.6m contract from TNB for the supply, erection, and commissioning of transmission main intake (PMU) 275/132 kilovolt (kV) Pasir Gudang Power Station Extension located in Johor. Under the terms of the contract, MN Power Transmission is tasked with establishing a new extension comprising two units of 275kV OHL Bays Permas Jaya, alongside replacing two existing units of 275kV OHL Bays Pasir Gudang Power Station North at PMU Pasir Gudang Power Station. (The Malaysian Reserve)

Kumpulan Kitacon: Secures RM81m housing job in Shah Alam. Kumpulan Kitacon's wholly owned subsidiary Kitacon SB has secured a contract worth RM81m for a housing development project in Shah Alam, Selangor. The contract, awarded by Sime Darby Property’s wholly owned unit Sime Darby Property (City of Elmina) SB, involves constructing and completing 40 double-storey cluster houses, 86 double-storey semi-detached houses, and one TNB substation in Seksyen U15, Shah Alam. (The Edge)

MyEG: Secures two-year renewal for moneylender’s license. MY EG Services (MyEG) via its sub-subsidiary, MY EG Finance Technologies SB (MYEGFT), has secured a two-year renewal for its moneylender’s license from the Ministry of Housing and Local Government of Malaysia, valid from 15 Jan 2024 to 14 Jan 2026. This renewed license empowers MYEGFT to continue its operations in money lending services, complementing its existing portfolio of business activities. (The Malaysian Reserve)

BHIC: To sell 20.8% stake in Lunas for RM335m. Boustead Heavy Industries Corp’s (BHIC) indirect wholly owned subsidiary, Perstim Industries SB, has proposed to dispose of 27,000,001 ordinary shares in Lumut Naval Shipyard SB (Lunas) to Ocean Sunshine (OSB) for RM334.7m cash. The proposed disposal is designed to support the government’s decision to ensure the completion of the littoral combat ship or LCS project. This initiative is also a part of the company’s operational and organisational restructuring, aiming to entities within the company. (StarBiz)

UCrest: Ties up with MDC to elevate dental care standards. Ucrest has entered into a five-year long partnership with MDC Asia Link (MDC) to provide a clinic management system (CMS) for its dental clinic chains. The collaboration entails a five-year renewable partnership to digitalise MDC’s clinics with artificial intelligence (AI) and Internet of Medical Things. The objective of the partnership is to elevate the standard of care in the dental industry. MDC will adopt UCrest’s iMedic platform as the CMS for its clinics. (StarBiz)

HeiTech Padu: Deputy chairman’s daughter Salmi Nadia appointed as MD. HeiTech Padu has appointed Salmi Nadia Mohd Hilmey as the group MD. Salmi, 42, was promoted to group CEO in Oct last year to replace her father Datuk Seri Mohd Hilmey Mohd Taib, who stepped down from his position due to personal commitment. However, he remained as the group’s executive deputy chairman. Mohd Hilmey holds a 3.8% direct stake and a 14.1% indirect stake in the company through its private vehicle Padujade Corp SB. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today as the S&P 500 and Nasdaq closed higher on Wednesday after data showing the US services industry growth slowed further in March, but the advance was limited after Federal Reserve Chair Jerome Powell indicated a cut in interest was still not in sight. Earlier on Wednesday, data from the Institute for Supply Management showed that nonmanufacturing PMI declined for the second straight month to 51.4 in March, down from 52.6 in February, and weaker than analysts had expected. The Dow Jones Industrial Average fell 43.1 points, or 0.11%, to 39,127.14, the S&P 500 gained 5.68 points, or 0.11%, to 5,211.49 and the Nasdaq Composite added 37.01 points, or 0.23%, to 16,277.46. European stocks gained on Wednesday after a softer-than-expected U.S. services sector data, while investors also assessed softening euro zone inflation data that cemented the case for European Central Bank interest rate cuts. The continentwide STOXX 600 closed 0.3% higher, recovering from a two-week intraday low. The index has been hitting record highs, with hopes of rate cuts this year and optimism around artificial intelligence buoying sentiment over the past two quarters.

Back home, Bursa Malaysia drifted lower on Wednesday as the key index snapped a three-day winning streak, taking a cue from the negative developments on Wall Street overnight. At the closing, the FBM KLCI shed 10.98 points, or 0.7%, to 1,537.01 from Tuesday’s close of 1,547.99. Elsewhere, Japan’s Nikkei 225 lost 1%, Hong Kong’s Hang Seng gave away 1.2% while Shanghai Composite Index eased 0.2%.

Source: PublicInvest Research - 4 Apr 2024