HEADLINES

Economy

US: Weekly jobless claims at 10-month high; inflation cooling. The number of Americans filing new claims for unemployment benefits increased to a 10-month high last week, suggesting the labor market was losing momentum and keeping hopes of a Sept interest rate cut from the Federal Reserve alive. That was reinforced by other data from the Labor Department showing producer prices unexpectedly falling in May. The largest decline in prices at the factory gate since Oct followed news that consumer prices were unchanged in May for the first time in nearly two years. Initial claims for state unemployment benefits jumped 13,000 to a seasonally adjusted 242,000 for the week ended June 8, the highest level since last August, the Labor Department said. (Reuters)

US: Fed meeting, benign inflation keep soft landing hopes alive. Soft landing hopes that have powered U.S. stocks this year received a boost following encouraging inflation data and a nod from the Federal Reserve at progress made in fighting consumer prices. Expectations for a so-called soft landing, in which the Fed is able to tame inflation and eventually cut interest rates while growth remains resilient, have been a key factor in the S&P 500's march to record highs in 2024. Fed Chairman Jerome Powell noted in a press conference at the end of the central bank's policy meeting that inflation had fallen without a major blow to the economy, and said there was no reason to think that trend can't continue. Powell also reiterated policymakers would need to see further evidence that prices were cooling before cutting rates. Fed officials, meanwhile, reined in projections for how aggressively they would cut rates this year, from three 25bps rate cuts to just one - a shift that was largely expected by investors. (Reuters)

EU: German government plans supplementary budget for 2024, Bild says. The German government is planning a supplementary budget for the current year with up to EUR11 bn (USD11.89 bn) in additional borrowing while respecting the debt brake, newspaper Bild said, citing government sources. The ministry of finance informed budget politicians of the coalition government about the plans a few days ago, Bild said. "Something like this is conceivable. But the government has not yet made a concrete decision," a government source told Reuters. (Reuters)

EU: German wholesale prices continue to decline. Germany's wholesale prices continued to decline in May, albeit at a slower pace. Wholesale prices registered an annual decline of 0.7% in May, which was slower than the 1.8% decrease in April. Wholesale prices have been falling since May 2023 and the latest decline was the slowest in the current sequence of decrease. The latest fall was largely driven by the 13.9% fall in prices in the wholesale trade in chemical products. Lower prices were also recorded in iron, steel and ferrous semi-finished metal products. On a monthly basis, wholesale price inflation softened to 0.1% from 0.4% in April. This was the third consecutive increase (Reuters)

EU: Swedish central bank gets smaller-than-requested cash injection. The Swedish parliament's finance committee has proposed that the central bank receive a capital injection of SEK25 bn crowns (USD2.40 bn), less than requested by the board, the Riksbank said. The central bank in April asked parliament for a capital injection of SEK43.7 bn crowns following a fall in the value of bonds bought between 2015 and 2021. Parliament's committee also proposed legislation that would strengthen the Riksbank's possibilities for self-financing, the central bank said. "The Riksbank's assessment is that equity should be restored to the statutory base level and that long-term self-financing must be secured," it said. "The current proposal for a capital injection of SEK25 bn crowns is a first step in line with our request," it added. (Reuters)

Japan: BOJ to keep ultra-low rates, may signal bond taper. The BOJ is likely to keep interest rates ultra-low but consider whether to start reducing its huge balance sheet in a slow but steady retreat from its massive monetary stimulus. However, the normalisation of Japan's still-loose monetary policy is clouded by weak consumption and doubts over the BOJ's view that robust domestic demand will keep inflation on track to durably hit its 2% target. Receding prospects of steady US interest rate cuts may also keep the yen weak against the dollar, complicating the BOJ's policy deliberations. Japan's battered currency has become a headache for policymakers by inflating import prices, which in turn boosts living costs and hurting consumption. (Reuters)

Taiwan: Taiwan central bank sees inflation coming under control; keeps rate steady. Taiwan's central bank said it saw inflation gradually coming down for the rest of the year but the overall tone of monetary policy remained hawkish. Taiwan's inflation has never been as high as in major Western economies - the CPI in May rose by 2.24% - but the central bank has made bringing it down a priority. It has also had to worry less about impacting economic growth, given that Taiwan's export-reliant economy has been getting a lift from global demand for computer chips, especially from the artificial intelligence boom. Governor Yang Chin-long told reporters after the quarterly rate-setting meeting - where the central bank left the benchmark discount rate at 2% as expected - that he saw inflation trending down. (Reuters)

Markets

TH Plantations: Forms partnership with UEM unit to develop biogas power plant in Johor. TH Plantations said it is teaming up with UEM Lestra, a wholly owned unit of UEM Group, to develop a 1.2 megawatt (MW) biogas power plant in Kluang, Johor. TH Plantations said the project will be carried out through a joint venture between its wholly owned unit THP Applications & Services SB, and UEM Lestra's subsidiary, Cenergi RE SB. TH Plantations, the plantation arm of Lembaga Tabung Haji, said the plant — which is set to begin operations in 2026 — will generate enough electricity to power up to 1,500 homes annually. (The Edge)

Sunview Group: Secures large scale solar project in Uzbekistan. Sunview Group has inked a development and cooperation agreement with Uzbekistan’s Ministry of Energy to develop two large-scale solar photovoltaic (PV) plants and battery energy storage systems (BESS) in Uzbekistan. Sunview said its unit is responsible for the design, engineering, procurement, and construction of a 400 megawatt of alternating current (MWac) solar PV plant with a 100 megawatt (MW)/200 megawatt hour (MWh) BESS in the Andijan district. (Bernama)

Solarvest: Buys office and retail space for RM48.7mil. Solarvest Holdings has proposed to acquire a four-level office space and a rooftop retail unit with a built-up area of 39,375 sq ft for RM48.7m cash. Solarvest said Solarvest Energy SB, a whollyowned subsidiary of Atlantic Blue SB, which in turn is a whollyowned subsidiary of the company entered into three separate conditional sales and purchase agreements (SPAs) with BK Alliance SB to acquire 4 levels of office space on Levels 26 to 29 with 200 parking bays and a rooftop retail unit on Level 31 of the Solarvest Tower in Kuala Lumpur. (StarBiz)

Careplus: To raise up to RM10.6m via private placement to fund EV manufacturing hub. Careplus Group plans to raise up to RM10.6m through a private placement to finance the construction of a manufacturing hub in Negeri Sembilan for its electric vehicle business. The glove maker said the exercise entails the issuance of 63.3m new shares, equivalent to 9.04% of its total number of issued shares. Careplus said the assumed price for the placement shares is 27.6 sen per share, representing a discount of about 9.95% over Careplus’ five-day volume weighted average market price of 30.65 sen up to June 7, the latest practicable date. (The Edge)

Tex Cycle Technology: Proposes to buy Meridian World for RM55m. Tex Cycle Technology (M) has proposed to acquire the entire equity interest in Meridian World SB for RM55m cash. Tex Cycle said it had entered into a binding term sheet with Yang WuHsiung, Amia Co Ltd, Beltrax Engineering SB, Good Credentials SB, Panbright Holdings SB, Peninsular Accord SB, Scientidex SB, Sunrise Majusama SB, Wong Mei Hwa and Yang Chueh-Kuang to negotiate the detailed terms and conditions to be contained in a definitive share sale agreement for the proposed acquisition. (StarBiz)

Sapura Energy: Sees deal with creditors following court extension to restructure debts. Cash-strapped Sapura Energy said it expects to reach an arrangement with its creditors by achieving a majority support in a court-convened meeting. This expectation is based on the group's ability to offer higher recovery through the scheme of arrangement compared to liquidation. (The Edge)

MARKET UPDATE

The FBM KLCI might open within a tight range today after most US stocks slipped Thursday, but hopes for coming cuts to interest rates and Wall Street’s continued frenzy around artificial-intelligence technology nudged indices to more records. The S&P 500 added 0.2% to its all-time high set the day before, even though the majority of stocks within it weakened. The Nasdaq composite climbed 0.3% from its own record, thanks to gains for technology stocks, while the Dow Jones Industrial Average fell 65 points, or 0.2%. The latest update on inflation showed prices paid at the wholesale level weren’t as bad as economists expected. Prices actually dropped from April into May, when economists were forecasting a rise. It followed a surprising update from Wednesday that showed inflation at the consumer level was lower than expected. Federal Reserve Chair Jerome Powell called that report encouraging and said policymakers need more such data before lowering their main interest rate from the most punishing level in two decades. European stocks fell sharply Thursday as leaders of the Group of Seven leading industrialized nations gathered in Italy. France’s CAC 40 fell 2%, and Germany’s DAX lost 2%.

Back home, Bursa Malaysia’s barometer index pared its earlier gains at the close, but market breadth remained strong with a mix of profit-taking and bargain-hunting activities. At the closing bell, the FBM KLCI gained 1.22 points to 1,610.17 compared to 1,608.95 at yesterday’s close. In the region, Japan’s Nikkei 225 slipped 0.4% ahead of a decision on interest rates by Japan’s central bank coming on Friday. Indices rose in Seoul and Hong Kong.

Source: PublicInvest Research - 14 Jun 2024