HEADLINES

Economy

US: Powell says US Fed needs more evidence of falling inflation before cutting rates. The US central bank still needs more data before cutting interest rates to ensure that recent weaker inflation readings give a true picture of what is happening to underlying price pressures, Federal Reserve chair Jerome Powell said. Data for May showed the Fed's preferred measure of inflation did not increase at all that month, while the 12-month rate of price increases has ebbed to 2.6%, still above the central bank's 2% target but on the way down. "We just want to understand that the levels that we're seeing are a true reading on what is actually happening with underlying inflation," Powell said at a monetary policy conference in Portugal sponsored by the ECB. (Reuters)

US: Job openings increase in May; layoffs rise. US job openings increased in May after posting outsized declines in the prior two months, but layoffs picked up amid slowing economic activity. Job openings, a measure of labour demand, rose 221,000 to 8.14m on the last day of May, the Labor Department's Bureau of Labor Statistics said. Data for April was revised lower to show 7.92m unfilled positions instead of the previously reported 8.06m. Economists polled by Reuters had forecast 7.91m job openings in May. Unfilled positions peaked at a record 12.18m in March 2022. Layoffs increased 112,000 to 1.65m in May. A gradually rebalancing labour market and subsiding inflation are drawing the Federal Reserve closer to beginning its easing cycle, with financial markets still eyeing the first interest rate cut in Sept, despite policymakers recently suggesting otherwise. (Reuters)

EU: Inflation slows as Lagarde plays for time on rates. Eurozone inflation slowed in June — adding to evidence that price pressures are gradually moving toward the ECB’s 2% target. Consumer prices rose an annual 2.5% last month, down from 2.6% in May and in line with the median estimate in a Bloomberg survey of economists. A measure excluding volatile items such as food and energy unexpectedly remained unchanged at 2.9%. After trimming interest rates by a quarter-point in June, officials are determining whether inflation for the 20-nation currency bloc is moderating enough to allow further cuts. At this week’s annual ECB retreat in Sintra, Portugal, president Christine Lagarde and chief economist Philip Lane said there’s no convincing evidence yet that the threat has passed. “We are still facing several uncertainties,” Lagarde said Monday evening. “It will take time for us to gather sufficient data to be certain that the risks of above-target inflation have passed.” (Bloomberg)

EU: Unemployment rate steady at 6.4%. The euro area unemployment rate held steady at a record low in May, data published by Eurostat showed. The jobless rate came in at seasonally adjusted 6.4%, which was unchanged from April and matched expectations. The unemployment rate was 6.5% in May 2023. There were 11.08m unemployed people in May. Compared with April, unemployment increased sharply by 38,000 but rose only 3,000 from the prior year. The jobless rate among young persons aged below 25 years was unchanged at 14.2% in May. Data showed that the overall unemployment rate in the EU27 also remained unchanged in May, at 6.0%, while the youth jobless rate dropped slightly to 14.4% from 14.5%. (RTT)

UK: Shop price inflation softest since late 2021: BRC. UK shop prices increased at the slowest pace since late 2021 in June as food prices posted a slower growth amid deepening deflation in non-food prices, the British Retail Consortium reported. The shop price index rose only 0.2% YoY in June, slower than the 0.6% increase in May. Shop price inflation hit the lowest since October 2021. The three-month average inflation was 0.5%. Non-food prices declined 1.0% annually in June, sharper than the 0.8% fall in the preceding month. At the same time, food inflation decelerated to 2.5% from 3.2%. Non-food prices posted the biggest decrease since October 2021 and food inflation was the slowest since December 2021. BRC Chief Executive Helen Dickinson said retailers invested heavily in improving their operations and supply chains to compensate for the impact of global shocks on input costs during the height of the cost-of-living crisis. Efforts of retailers paid off, Dickinson added. (RTT)

Hong Kong: Retail sales log further sharp decline in May. Hong Kong's retail sales value continued to decrease sharply in May, preliminary data from the Census and Statistics Department showed. The value of retail sales fell 11.5% YoY in May, following a 14.7% plunge in April. Moreover, it was the third successive monthly fall. Meanwhile, online sales, which accounted for 8.7% of the total sales value in May, grew 21.9% from last year versus an 11.5% increase in the previous month. The annual decline in retail sales volume eased to 12.9% in May from 16.5% in the previous month. Sales of jewelry, watches and clocks, and valuable gifts alone slumped 21.4%, and those of clothing, footwear, and allied products dropped by 17.9%. The further sharp fall in the value of sales was mainly due to the changes in the consumption patterns of visitors and residents, as well as the strength of the Hong Kong dollar, a government spokesman said. (RTT)

Markets

Reservoir Link (Neutral, TP: RM0.31): Completes 1.5GW solar projects. Reservoir Link Energy has revealed that it has completed solar projects totaling more than 1.5 gigawatts (GW) since its diversification into the solar renewable energy segment in 2021, via the acquisition of Founder Energy SB. In a statement, the energy related services provider said it has completed a total of 1,513 megawatts (MW) in solar projects to date, with 311MW delivered in the financial year ended Dec 31, 2021. This was followed by the completion of 924MW in the following 18 months in the financial period ended June 30, 2023 and 278 MW delivered in the financial year ended June 30, 2024. (StarBiz)

Pertama Digital: Secures online ID onboarding services contract from MyDigital ID. Pertama Digital has secured a contract to provide public online digital identity (ID) onboarding registration services for the national digital ID platform, MyDigital ID. The digital solutions provider said the contract was awarded to its subsidiary Dapat Vista (M) SB by My Digital ID SB. The duration of the contract is four months, with an option to extend for an additional three months. The contract is expected to contribute positively to the future earnings of the group and strengthen its net asset position over the duration of the contract. (The Edge)

KNM: Explores fresh options to sell Italian unit after another failed attempt. KNM Group is considering fresh options for selling its Italian subsidiary, FBM Hudson Italiana SpA (FBMHI), following a third failed attempt. The announcement follows the collapse of KNM's deal to sell the loss-making FBMHI, a manufacturer of heat and high-pressure equipment, to Milan-based BM Carpenterie Oil & Gas Srl (BMC) and Verona-based Officine Piccol SpA for EUR16.5m (RM83.54m). KNM said the initial agreement with these buyers expired on June 30. (The Edge)

Malton: To acquire Genting land for RM65m. Malton is acquiring four parcels of Genting land from Sering Manis SB, a 51%-owned subsidiary of Global Oriental, in Bentong, Pahang for RM65m. The lands measure approximately 30.167 acres and is sited off and to the east of Jalan Meranti, which is connected to the main road leading up to Resorts World Genting and to the south of Genting View Resort, within the locality of Genting Highlands. (StarBiz)

G Capital: Scraps RM113m rights issue of RCULS. G Capital has decided to scrap its planned rights issue of redeemable convertible unsecured loan stocks (RCULS) due to unfavourable market conditions. On behalf of the board, KAF Investment Bank wishes to announce that, after due consideration of the downward trend of the market prices of GCAP shares since the announcement of the rights issue on 5 April 2023, the board had resolved not to proceed with the rights issue. (The Edge)

Sunway: Sells Johor land to Singaporean firm Equalbase for over RM380m. Sunway Group is selling two parcels of land measuring 64 acres in Sunway City Iskandar Puteri (SCIP), Johor, in a deal worth over RM380m for data centre development. In a statement, Sunway Group said it has sealed the land deal with Singapore-based Equalbase Pte Ltd, which designs, develops, invests in and manages essential areas such as clean energy production, battery storage systems and innovative water solutions. (The Edge)

MARKET UPDATE

The FBM KLCI might open stronger today after Tesla zoomed higher and helped drive the US stock market to more records on Tuesday. The S&P 500 added 0.6% to top its all-time high set two weeks ago. The Dow Jones Industrial Average rose 162 points, or 0.4%, and the Nasdaq composite added 0.8% to its own record set a day before. Tesla led the way with a 10.2% jump after the electricvehicle maker reported a milder drop in sales for the spring than analysts expected. Modest gains for other big, influential stocks also helped lift the market, including a 1.6% climb for Apple. Across the Atlantic, European indices fell after a report showed inflation in the region remains stuck above a level that the European Central Bank is hoping for. Germany’s DAX lost 0.7%, and France’s CAC 40 fell 0.3%. A day earlier, French stocks had rallied after election results suggested a far-right political party may not win a decisive majority in the country’s legislative elections. That raised the possibility of gridlock in the French government, which would prevent a worst-case scenario where a far-right with a clear majority could push policies that would greatly increase the French government’s debt.

Back home, Bursa Malaysia closed trading on the first day of the second half of the year firmer in line with the improving performance of regional peers with buying mainly in the financial service stocks. At the closing bell, the FBM KLCI rose 0.51% or 8.11 points to 1,598.20 from Friday’s close of 1,590.09. In the region, Japan’s Nikkei 225 rose 1.1% after the value of the Japanese yen again neared a 38-year low. When the yen is weak, it can boost the fortunes of Japanese exporters.

Source: PublicInvest Research - 3 Jul 2024