Economy

US: Yellen says fundamentals still point to slowing inflation. US Treasury Secretary Janet Yellen said she still sees underlying price pressures receding even as a tight housing supply has helped stall the downward path of inflation. “To me the fundamentals are: inflation expectations — they’re well under control, and the labour market — strong but not a significant source of inflationary pressure,” Yellen said in an interview with Bloomberg News in Sedona, Arizona. The Treasury chief pointed to data out Friday showing average hourly earnings rose 0.2% in April. “This is one data point, I don’t want to overemphasise,” Yellen said, “but certainly two tenths a month is consistent, even a little bit below what’s consistent, I think, with 2% inflation.” (Bloomberg)

US: Job gains fewest in six months; unemployment rate rises to 3.9%. US job growth slowed more than expected in April and the increase in annual wages fell below 4.0% for the first time in nearly three years, but it is probably too early to expect that the Fed will start cutting interest rates before Sept as the labor market remains fairly tight. The Labor Department's closely watched employment report also showed the unemployment rate rising to 3.9% from 3.8% in March amid rising labor supply. Nonetheless, the jobless rate remained below 4% for the 27th straight month. Financial markets boosted the odds of a Sept rate cut and saw the US central bank reducing borrowing costs twice this year instead of only once before the data. Nonfarm payrolls increased by 175,000 jobs last month, the fewest in six months, the Labor Department's Bureau of Statistics said. Revisions showed 22,000 fewer jobs created in Feb and March than previously reported. (Reuters)

US: Service sector activity contracts for first time since Dec 2022. After growing for fifteen consecutive months, US service sector activity unexpectedly contracted in the month of April, according to a report released by the Institute for Supply Management. The ISM said its services PMI dipped to 49.4 in April from 51.4 in March, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 52.0. With the unexpected decrease, the services PMI indicated activity in the sector contracted for the first time since Dec 2022. The decline by the headline index partly reflected a notable slowdown in the pace of growth in business activity, as the business activity index slid to 50.9 in April from 57.4 in March. (RTT)

EU: Unemployment rate steady at 6.5% for fifth month. Euro area jobless rate remained unchanged at a record low for the fifth month in a row in March and the unemployment decreased, while a tight labor market could urge the ECB to remain cautious even as policymakers gear up for an interest rate cut in June. The seasonally adjusted unemployment rate was 6.5% in March, which is the same level as in the previous four months, data from Eurostat showed. The rate was in line with economists' expectations. A year ago, the jobless rate was 6.6%. The jobless rate for the EU fell to 6.0% from 6.1% in Feb. The rate was at a similar level in the same month last year. (RTT)

EU: Italy jobless rate falls to 7.2%, lowest in over 15 years. Italy's unemployment rate decreased to the lowest level in more than fifteen years in March after rising slightly in the previous month, the statistical office ISTAT reported. The jobless rate dropped to 7.2% in March from 7.4% in Feb. Meanwhile, economists had expected the index to rise to 7.5%. In the corresponding month last year, the rate was 7.9%. Further, the latest jobless rate was the lowest since January 2009, when it was also the same 7.2%. (RTT)

UK: Services growth strongest in 11 months. The UK service sector expanded at the quickest pace in nearly a year, spurred by a renewed strengthening of order books, final data from S&P Global showed. The services purchasing managers' index rose to 55.0 in April from 53.1 in March. That was also above the flash score of 54.9. A score above 50 indicates expansion. The UK service sector expanded for the sixth consecutive month in April. New orders also grew at the fastest pace in nearly a year as sales pipelines improved amid stronger business and consumer spending. New export orders rose at the strongest rate since March 2023 on the back of stronger sales demand for clients in the US and Asia. Service sector employment increased slightly in April, and the subdued recruitment was mainly due to a shortage of suitable candidates along with elevated wage costs. (RTT)

Singapore: Retail sales growth eases to 2.7%. Singapore's retail sales expanded at a slower pace in March, preliminary data from the Department of Statistics showed. Retail sales rose 2.7% YoY in March, much slower than the 8.6% gain in Feb. However, this was the third successive monthly rise. Sales excluding motor vehicles grew 2.0% from last year, which was 9.5% in Feb. There was a 17.0% jump in sales of food and alcohol from last year. Retailers in the watch and jewellery industries saw annual growth in sales of 14.1%. Nonetheless, rate growth eased in both divisions. Sales at supermarkets and hypermarkets rose only by 1.2%. (RTT)

Thailand: Inflation rate positive in April, still below central bank target. Thailand's headline inflation rate rose for the first time in seven months in April but remained below the central bank's target range of 1% to 3% for a 12th consecutive month, data showed. The consumer price index (CPI) rose 0.19% in April from a year earlier, after a 0.47% YoY drop the previous month, the commerce ministry said. The rise compared with a forecast fall of 0.25% in a Reuters poll, and was the first time since Sept 2023 that the headline inflation rate was positive. The rise reflected a low base for electricity prices last year, higher agricultural prices, and a weak baht, the Director of Trade Policy and Strategy Office, Poonpong Naiyanapakorn, told. (Reuters)

Markets

Bcorp: Completes acquisition of 100% stake in Berjaya Enviro. Naza Corp Holdings SB (Naza Group) has completed the acquisition of a 100% stake in Berjaya Enviro Holdings SB (BEnviro) for RM700m. In a statement, Naza Group said the acquisition presented a unique opportunity for the group to venture into the green economy, capitalising on growth opportunities in municipal solid waste (MSW), scheduled waste (SW) and waste to energy (WTE) sectors. (StarBiz)

F&N: To allocate RM1.7bn capex for Negri Sembilan dairy farm. Fraser & Neave Holdings plans to set aside RM1.7bn in capital expenditure for its integrated dairy farm called F&N AgriValley in Gemas, Negeri Sembilan. F&N had completed the social impact study of the project, with land clearance and site preparation of the dairy barn site near completion, according to its chief executive officer Lim Yew Hoe. The company had also selected the first batch of dairy cattle on schedule to meet the farm's first milking target date of early 2025. (BTimes)

Pestech: Loses another appeal in Gemas-JB double track dispute. Pestech International has lost an appeal to stop the tampering of machineries used in the Gemas-Johor electrified double track project by main contractor Syarikat Pembenaan Yeoh Tiong Lay SB (SPYTL). Pestech SB, a unit of Pestech International, had filed an appeal against an earlier High Court decision to dismiss its interim injunction application against SPYTL on the matter. This application was dismissed by the Court of Appeal, with costs of RM15,000. (The Edge)

PetGas: Gets nod for gas transportation tariff hike; regas sees mixed adjustment. The Energy Commission (EC) has raised the tariff to transport gas via Peninsular Malaysia’s gas pipeline, owned and operated by Petronas Gas (PetGas), to RM1.096 per gigajoule per day (GJ/day) for 2024, versus a base of RM1.063 GJ/day under Regulatory Period 2 (2023-2025). Besides the rise in the Peninsular Gas Utilisation (PGU) transportation tariff, PetGas said the tariff for the supply of high-pressure gas to Singapore has been raised to RM1.701 GJ/day as compared to the base RP2 tariff of RM1.614 GJ/day. (The Edge)

Lagenda Properties: Kicks off construction of first large-scale landed Rumah Selangorku project. Lagenda Properties has broken ground of its inaugural township in Selangor that it claims will be the first large-scale landed Rumah Selangorku project. The Lagenda Ardea township will be developed in partnership with Selangor state government's wholly-owned Kumpulan Hartanah Selangor, according to Lagenda Properties. The groundbreaking ceremony, was officiated by Selangor Menteri Besar Datuk Seri Amirudin Shari. (BTimes)

XOX: Proposes RM303m share capital reduction. XOX has proposed to undertake a share capital reduction to wipe out RM303m of the virtual mobile network operator’s accumulated losses. The company, which had been in the red for five straight years, had racked up losses totalling RM307.48m by the end of 2023 despite a slew of fundraising exercises. XOX raised nearly RM300m in the three financial years of 2020, 2021 and 2022 in the equity market, including through share issuance, private placements, four-for-two rights issue of preference shares, and employee share option scheme. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after Wall Street capped a choppy week of trading Friday with the best day for the stock market in over two months, as traders welcomed cooler-thanexpected US employment data as a sign that inflationary pressures on the economy are easing. The S&P 500 rose 1.3%, its best day since late February. The benchmark index also erased its losses for the week. The Dow Jones Industrial Average rose 1.2%. The Nasdaq composite ended 2% higher, reflecting strong gains by technology sector stocks, which accounted for much of the rally. The nation’s employers added 175,000 jobs last month, down sharply from the blockbuster increase of 315,000 in March, according to the Labour Department. The latest hiring tally came in well below the 233,000 gain that economists had predicted. Meanwhile, average hourly earnings, a key driver of inflation, rose less than expected. In Europe, Germany’s DAX gained 0.6%, while the CAC 40 in Paris rose 0.5% and London’s FTSE 100 added 0.5%.

Back home, Bursa Malaysia ended the week on a firmer note Friday, bucking the mostly lower regional market performance, on persistent buying in utilities and selected technology stocks. At the closing bell, the FBM KLCI rose 9.29 points or 0.59 % to 1,589.59 from Thursday’s close of 1,580.30. Regionally, Hong Kong’s Hang Seng Index rose 1.48 % to 18,475.92, South Korea’s Kospi eased 0.26 % to 2,676.63, and Singapore's Straits Times Index shed 0.12 % to 3,292.93. Markets in Tokyo and mainland China were closed for holidays.

Source: PublicInvest Research - 6 May 2024