HEADLINES

Economy

US: Job openings hit 3.5 year low as labor market eases. U.S. job openings dropped to a 3.5-year low in July, suggesting the labor market was losing steam, but the reduction on its own is probably not enough to warrant a 0.5% interest rate cut by the Federal Reserve this month. The larger-than-expected decline in unfilled jobs shown in the Job Openings and Labor Turnover Survey, or JOLTS report, from the Labor Department meant there were 1.07 open positions for every unemployed person in July. That was the least since May 2021 and down from 1.16 in June. The vacanciesto-unemployed ratio peaked just above 2.0 in 2022. Still, the labor market is likely not deteriorating. A separate report from the Fed described employment levels as "generally flat to up slightly in recent weeks."

US: Trade deficit widens to USD78.8bn, largest in 2 years. The US trade deficit widened to a two-year high in July, fueled by a surge in imports of goods and partly reflecting stepped-up efforts by companies to ensure adequate supply ahead of a potential dockworkers’ strike. The goods and services trade gap grew 7.9% from the prior month to USD78.8bn, Commerce Department data showed. The figure was in line with the median estimate in a Bloomberg survey of economists. The value of goods and services imports increased 2.1% to the highest level since March 2022. Exports rose 0.5%. The figures aren’t adjusted for inflation. (Bloomberg)

EU: Euro zone August business activity gets Olympic lift, PMI shows. Euro zone business activity received a boost from France hosting the Olympic Games last month but the malaise in the bloc is likely to return once the Paralympics wraps up as demand remains weak, a survey showed. HCOB's composite PMI for countries in the currency union, compiled by S&P Global and seen as a good gauge of overall economic health, jumped to 51.0 in August from July's 50.2. That exceeded the 50 mark separating growth from contraction for a sixth consecutive month but was a tad below a preliminary 51.2 estimate. (Reuters)

EU: Growth in German services sector loses momentum in August, PMI shows. Growth in Germany's services sector slowed for a third consecutive month in August, a survey showed, in a further sign that Europe's biggest economy is losing steam. The HCOB final services PMI eased to 51.2 from 52.5 in July. Although slightly below a preliminary estimate of 51.4, it was above the 50.0 mark that separates growth from contraction for a sixth straight month. (Reuters)

UK: Services activity at four-month high in August, PMI shows. Britain's services activity grew last month at the fastest pace since April and price pressures eased, according to a survey that pointed to a more benign inflation outlook and a settling of the economy after July's elections. The S&P Global UK Services PMI rose in August to 53.7 from 52.5 in July, above a preliminary estimate of 53.3. The survey added to signs of an upturn for business since the 4 July election which delivered a landslide victory for Prime Minister Keir Starmer's Labour Party. Cost pressures for services companies and their selling prices increased at the weakest rate since early 2021, something that will be welcomed by the BoE ahead of its 19 Sept. announcement on interest rates. (Reuters)

China: Services activity expansion slows in August, Caixin PMI shows. Growth in China's services sector activity slowed in August despite the summer travel peak, prompting some firms to cut staff amid concerns about rising costs, a private-sector survey showed. The Caixin/S&P Global services PMI slipped to 51.6 in August from 52.1 in July. The 50-mark separates expansion from contraction on a monthly basis. The new business index remained above 50, extending the sequence of expansion that started from January 2023, but the rate of growth was softer than July. Export business quickened, however. According to panelists, overseas client interest in the tourism industry supported faster business growth. (Reuters)

Japan: Service activity extends gains in August, PMI shows. Japan's service-sector activity extended gains in August, a private sector survey showed, thanks to an uptick in overseas sales despite a darkening global outlook. The final au Jibun Bank Service PMI was unchanged at 53.7 last month, staying above the 50.0 line that separates expansion from contraction for a second consecutive month. While the headline figure was in line with July's reading, service companies' new business growth slowed from the previous month. But export sales rebounded from a contraction in July to the largest rise in three months, supporting overall servicesector business. (Reuters)

Australia: Economy stuck in slow lane, household spending drags. Australia's economy stayed stuck in the slow lane in the June quarter as stiff borrowing costs and stubborn inflation squeezed consumers, leaving government spending as the main driver of growth. Real GDP rose 0.2% in the second quarter, unchanged for three straight quarters, and was just under market forecasts of 0.3%. Annual growth slowed to 1.0% from 1.3% the previous quarter, lows last seen during the 1990s recession, barring distortions from the pandemic. For the quarter, household spending, which accounts for half of GDP, actually fell 0.2% to drag on growth, as people cut back on trips abroad. The savings rate stayed subdued at 0.6%. (Reuters)

Markets

YTL Power: Confirms MACC questioned YTL Comms over 1BestariNet. YTL Power International has confirmed that its subsidiary YTL Communications SB (YTL Comms) has been questioned by the Malaysian Anti-Corruption Commission (MACC) about the Ministry of Education's 1BestariNet project, valued at RM4bn. "We wish to confirm that MACC has recently requested information from YTL Comms in respect of the 1Bestarinet project," YTL Power said. Bernama reported that MACC had launched an investigation into payment claims related to the 1BestariNet service tender, as the graftbuster raided several government offices as well as the office of YTL Comms. (The Edge)

Ocean Vantage: Sees Sarawak-based companies emerge as largest shareholders. Ocean Vantage Holdings announced the emergence of three new Sarawak-based substantial shareholders, following the disposal of a collective 23.32% stake by executive directors Martin Philip King Ik Piau and Yau Kah Tak, and one other. The three new shareholders, all based in Kuching, are Majuco Motor SB (10% or 42m shares), Pertanian Teguh Jaya SB (7.75% or 32.5m shares) and Resources Hub Logistics SB (5.57% or 23.4mn shares). (The Edge)

Jentayu: Receives approval for plant in Sabah. Jentayu Sustainables has received a letter of notification from the Energy Commission of Sabah for Project Oriole, a 162 megawatts (MW) run-of-river hydropower plant in Sipitang, Sabah. Jentayu said the project will generate a revenue of approximately RM270m per annum and contribute positively to the company. “The project upon completion, will provide additional generation capacity of 162MW for Sabah,” said Jentayu, adding that it is expected to be funded via a debt-to-equity ratio of 80:20. (StarBiz)

Central Global: Clinches Pan Borneo contract. Central Global (CGB), via its wholly-owned sub-subsidiary RYRT International SB, has accepted a letter of award from Pembinaan Urusmesra SB for road upgrades to the Sabah Pan Borneo Highway project, worth RM616.4m. CGB said the contract is for the construction and completion of Phase 1B that will comprise the upgrading of roads from the Lahad Datu Bypass to the Kg Sandau (work package 22). “Under the scope of the contract, RYRT will be responsible for the supply of plant, machinery, labour and materials required for the construction and completion of the project. (StarBiz)

Elridge Energy: Signs MoU with Orion for palm kernel supply. Elridge Energy Holdings has entered into a MoU with PT Orion APAC Indonesia (Orion) for the sale and purchase of palm kernel shells. Under the terms of the MoU, Elridge Energy will supply Orion with 150,000 tonnes of palm kernel shells annually over a three-year period, beginning in April 2025 and concluding in March 2028. Elridge Energy said the contract also includes an option for automatic renewal for an additional three years, subject to renegotiated terms and conditions. (StarBiz)

KIP REIT: KIPMall Senawang in asset upgrade. KIP Real Estate Investment Trust (KIP-REIT) has completed the asset enhancement initiatives (AEI) for its KIPMall Senawang in Negri Sembilan. KIP-REIT said the AEI efforts, initiated in Feb 2024, encompassed the addition and modernisation of retail outlets, food and beverage outlets, mall entrance renovations, air conditioning system enhancements and firefighting system upgrades. “These enhancements were also extended to a 51,000 sq ft area to facilitate its new key anchor tenant, ST Rosyam. (StarBiz)

MARKET UPDATE

The FBM KLCI might open lower as US stock indices lost more ground Wednesday, with declines in the technology, energy and other sectors adding to Wall Street’s losses a day after the market’s worst skid in a month. The S&P 500 fell 0.2% following Tuesday’s 2.1% drop. The Nasdaq composite shed 0.3%. The Dow Jones Industrial Average, however, managed a gain of 0.1%. The market’s latest pullback came as a government report showed job openings in the US fell unexpectedly in July, a sign that hiring could cool in the coming months. The Labour Department reported that there were 7.7 million open jobs in July, down from 7.9 million in June and the fewest since January 2021. Openings have fallen steadily this year, from nearly 8.8 million in January. But overall, the report was mixed, with hiring having risen last month. The employment market is being closely watched by investors and the Federal Reserve as a gauge of the economy’s strength. Wall Street traders are anticipating that the Fed will start cutting its benchmark interest rate at its. Markets in Europe and Asia also mostly fell.

Back home, Bursa Malaysia ended lower, tracking an equity rout worldwide after weak US data fuelled fears of a slowdown in global economic growth. At the close, the FBM KLCI slipped 6.41 points, or 0.38%, to 1,670.24. The key index opened 14 points lower at 1,662.65 and moved between 1,675.53 and 1,662.22 throughout the day.

Source: PublicInvest Research - 5 Sept 2024