HEADLINES

Economy

US: Powell says Fed will cut rates when ready, regardless of political calendar. Federal Reserve Chair Jerome Powell said on Wednesday the U.S. central bank will make interest rate decisions "when and as" they are needed, pushing back on a suggestion that a September rate cut could be seen as a political act ahead of the fall presidential election. "Our undertaking is to make decisions when and as they need to be made, based on the data, the incoming data, the evolving outlook and the balance of risks, and not in consideration of other factors, and that would include political factors," Powell said in a hearing before the House Financial Services Committee. "We have a long history of doing that, including during election years...Anything we do will be very well grounded. It's just not appropriate for us to get into the business of thinking about election cycles at all, one way or the other." (Reuters)

US: Monthly consumer prices post first drop in four years as inflation subsides. U.S. consumer prices fell for the first time in four years in June amid cheaper gasoline and moderating rents, firmly putting disinflation back on track and drawing the Federal Reserve another step closer to cutting interest rates in September. The second straight month of benign consumer price readings reported by the Labor Department should help to bolster confidence among officials at the U.S. central bank that inflation is cooling after surging in the first quarter. The report also showed a measure of underlying inflation posting the smallest increase since August 2021 on a monthly basis. (Reuters)

US: Weekly jobless claims fall more than expected. The number of Americans filing new applications for unemployment benefits dropped more than expected last week, but volatility around this time of the year as automobile manufacturers idle plants for retooling makes it harder to get a clean read on the labor market. Initial claims for state unemployment benefits fell 17,000 to a seasonally adjusted 222,000 for the week ended July 6, the lowest level since late May, the Labor Department said. (Reuters)

EU: German inflation confirmed at 2.5% in June. German inflation eased in June to 2.5%, the federal statistics office said, confirming preliminary data. German consumer prices, harmonised to compare with other European Union countries, had risen by 2.8% YoY in May. The statistics office gives more detailed monthly data on its website.. (Reuters)

EU: Half of German manufacturers expect revenue growth only in 2025, VDMA reports. More than half of German manufacturers consider an upturn in nominal revenue as realistic only next year after taking a more pessimistic outlook for 2024, a survey by the VDMA association showed. Around 40% expect revenue to fall in the current year, while 23% expect them to stagnate, according to the VDMA. "Quite a few companies had pinned their hopes on a positive second half of 2024. However, in terms of incoming orders, these hopes have not materialised for many," said VDMA economic analyst Ralph Wiechers. . (Reuters)

UK: Faster economy growth gives gift to new government. Britain's economy grew more quickly than expected in May, providing some momentum for the new government of Prime Minister Keir Starmer but adding to doubts about whether the BoE will cut interest rates next month. Economic output increased by 0.4% in May, after zero growth in April, the Office for National Statistics said. A Reuters poll of economists had pointed to a 0.2% monthly increase. The strength of the upturn could dissuade the BoE from beginning to cut interest rates as soon as Aug. 1, its next scheduled monetary policy announcement date. Three policymakers this week emphasised the strength of domestic price pressures. (Reuters)

UK: Housing market stays muted but optimism builds, RICS survey shows. Britain's housing market remained soft in June but surveyors were more positive about the outlook following this month's parliamentary elections and with interest rates likely to fall. The Royal Institution of Chartered Surveyors' monthly net balance of house prices held at -17, marking the joint lowest reading since January. "Although activity across the housing market remained subdued last month, forward-looking aspects did improve slightly," Tarrant Parsons, RICS senior economist, said. (Reuters)

Thailand: Consumer confidence hits 9-mth low in June on economic, political concerns. Thai consumer confidence dropped for a fourth straight month in June to its lowest level since last September due to concerns about an economic slowdown and political uncertainty, a survey showed on Thursday. The consumer index of the University of the Thai Chamber of Commerce fell to 58.9 in June from 60.5 in May, the university said in a statement. Consumers felt that politics became unstable following a court case that could potentially lead to the dismissal of the prime minister, and that the economy was slowing down or recovering slowly because a lack of clear stimulus measures, the university said. (Reuters)

Markets

Astro (Neutral, TP: RM0.35): Gets RM735m additional tax bill from IRB. Astro Malaysia Holdings has been served with an additional tax bill of RM734.9m, for the years of assessment of 2019 to 2023, including penalties. Notices for the additional tax were received by its wholly-owned units Astro Shaw SB and MEASAT Broadcast Network Systems SB. Astro Shaw's notice showed an additional tax of RM22.0m while MBNS has to pay RM712.9m. (The Edge)

BM Greentech: Proposes one-for-four bonus issue of warrants. BM Greentech has proposed to undertake a bonus issue of up to 172m warrants on the basis of one warrant for every four existing BMG shares held by entitled shareholders. The company will undertake the exercise once it completes the proposed acquisition of the entire stake, or 66.6m shares, in solar firm Plus XNergy Holding SB (PXH) as well as a special issuance to QL Resources, which holds a 52.57% stake in BGM. (The Edge)

Keyfield: Delivers vessel to Helms Geomarine for three-plustwo years charter. Keyfield International delivered its Keyfield Helms 1 (KH1) geotechnical vessel to Helms Geomarine SB for a three-plus-two years charter contract. The charter party agreement, signed in December 2023, will begin this month until end-June 2027, Keyfield said. KH1 will be utilised to primarily support Helms Geomarine which recently secured a three-year geotechnical investigation contract from Petronas. (The Edge)

Shin Yang: Buys firms for RM145m. Shin Yang Group has entered into two conditional share sale agreements for the acquisition of four companies for RM144.5m. The shipping group announced that it had entered into a conditional share sale agreement with Shin Yang Holding SB, KTE Motors SB and Ling Chiong Sing to acquire a 100% equity interest in Boulevard Jaya SB. (StarBiz)

Aneka Jaringan: Bags RM53m sub-contract for construction project in Selangor. Aneka Jaringan Holdings has secured a RM53m sub-contract for the execution of bored piles and precast reinforced concrete piles works in Selangor. The sub-contract was awarded to its wholly owned subsidiary Aneka Jaringan SB by Grand Dynamic Builders SB. The project, scheduled to start on July 17 and is expected to be completed by March 1, 2025, involves the construction of a new logistics hub for Strategic Sonata Sdn Bhd. (The Edge)

Asia Poly: Buys stake in director’s company to jump onto data centre bandwagon. Asia Poly Holdingssaid it is buying a 50% stake in a IT engineering firm, Darwell Asia Pacific SB — a move to venture into telecommunications engineering and data centre support services. The stake acquisition will cost RM6.1m in cash. The cast acrylic sheets manufacturer is buying the stake from Darwell’s current directors namely Ooi Chee Seong, who will disposed 48% of his stake valued at RM5.86 million, and Tan Lian Li (disposing 2% stake worth RM244,000). (The Edge)

G3 Global: Secures Maldives job. G3 Global has received a letter of award from the Maldives’ Homeland Security and Technology Ministry granting the company exclusive rights to implement the National Integrated Migrant Workers Dormitory (NiMWD) for the Maldives government. G3 Global said the NiMWD system is a holistic digital platform which aims to oversee and manage the accommodation and welfare of all migrant workers in the Maldives. (StarBiz)

MARKET UPDATE

The FBM KLCI might open higher today as most US stocks rose after the latest update on inflation bolstered Wall Street’s belief that relief on interest rates may come as soon as September. Three out of every four stocks in the S&P 500 climbed Thursday, and homebuilders, real-estate owners and other stocks that benefit the most from easier interest rates led the way. But slumps for Nvidia, Tesla and other influential stocks in the small group that’s come to be known as the Magnificent Seven masked the underlying strength. That dragged the S&P 500 49.37 points, or 0.9%, to 5,584.52. Meanwhile, the Dow Jones Industrial Average rose 32.39 points, or 0.1%, to 39,753.75 and the Nasdaq composite fell 364.04 points, or 2%, to 18,283.41. The Russell 2000 index of smaller companies rose 73.28 points, or 3.6%, to 2,125.04. In Europe, UK stocks closed higher on Thursday, propelled by utilities shares, while an unexpected fall in US inflation cemented bets of an interest rate cut from the Federal Reserve this year. The blue-chip FTSE 100 index was up 0.4% for the second straight session. Europe's STOXX 600 index earlier closed up 0.6%. Back home, Bursa Malaysia continued its uptrend on Thursday amidst bullish global risk appetite after the Wall Street hit another record high. At the closing bell, the FBM KLCI rose by 4.74 points to 1,623.12. MSCI's gauge of stocks across the globe fell 0.76 points, or 0.09%, to 824.01 after rising about 0.7% to a record high earlier in the day.

Source: PublicInvest Research - 12 Jul 2024