HEADLINES

Economy

US: Fed’s Daly sees one or two more quarter-point cuts this year. Fed of San Francisco President Mary Daly said she expects the US central bank will continue lowering interest rates this year in an effort to protect the labour market. “I think that two more cuts this year, or one more cut this year, really spans the range of what is likely in my mind, given my projection for the economy,” Daly, referring to one or two quarter-point reductions. The Federal Open Market Committee last month lowered rates by a larger-thannormal 50bps amid signs of weakening in the labour market and as inflation cooled toward the Fed’s 2% target. Daly characterized that move as a “recalibration,” the same word employed by Fed Chair Jerome Powell to describe the cut as something aimed at preserving the economy’s strength. (Bloomberg)

US: Higher food prices lift US consumer prices; Hurricane Helene boosts jobless claims. US consumer prices rose slightly more than expected in Sept amid higher food costs, but the annual increase in inflation was the smallest in more than 3-1/2 years, keeping the Fed on track to cut interest rates again next month. Other data from the Labour Department showed first-time applications for unemployment benefits surged last week to the highest level in more than a year, boosted by Hurricane Helene and a nearly four-week-old strike at Boeing (BA. N), opens new tab, which has forced the US planemaker to furlough workers and impacted suppliers. The strike and hurricanes could distort the labor market picture this month. (Reuters)

US: CPI data will likely show further disinflation in Sept. Economists anticipate that key measures of inflation decelerated in Sept, in spite of price pressures in some categories of goods including used cars. The CPI and the so-called core gauge that excludes food and energy likely rose 0.1% and 0.2%, respectively, last month, according to the median estimates in a Bloomberg survey of economists. In both cases, the monthly increases would be a step-down from Aug. On an annual basis, the overall measure is seen increasing 2.3%, marking the slowest pace since early 2021. The core metric is expected to show a 3.2% annual increase for a second month. If the figures come in line with the consensus, they are unlikely to weigh much on the Fed’s next policy decision in Nov. (Bloomberg)

EU: ECB accounts show cautious stance on further policy easing. ECB policymakers appeared content with the drop in inflation when they met last month but argued for a gradual policy easing given stubborn price pressures, the accounts of their Sept 12 policy. The ECB cut interest rates last month and said it would keep an open mind about Oct but a long list of policymakers have already made the case for a follow-up move, suggesting that a cut next week was likely despite some lingering opposition. The ECB's account of the Sept meeting showed a more cautious mood, with the emphasis on the remaining hurdles towards stabilising inflation at the bank's 2% target despite an increasingly bleak outlook for growth. (Reuters)

Japan: Wholesale inflation perks up, JPY rise eases cost pressure. Japan's wholesale inflation accelerated in Sept but prices of imported goods slid due to the JPY's rebound, data showed, suggesting that price pressures from raw material costs were subsiding. The decline in import costs will likely shift the BOJ's attention to whether a more demand-driven rise in inflation takes hold in the world's fourth-largest economy. The corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, rose 2.8% in Sept from a year earlier, BOJ data showed, exceeding a median market forecast for a 2.3% gain. (Reuters)

India: Sept inflation likely overshot RBI's 4% target; Reuters poll. India's retail inflation in Sept likely overshot the RBI’s 4% medium-term target for the first time since July due to a persistent rise in vegetable prices and a lower year-ago base, a Reuters poll found. Food items, especially vegetables and other perishables, which make up a significant share of overall household spending in the country, saw an uptick in prices as heavy rains reduced the availability of essential crops. A high base from last year, which helped bring down inflation in July and Aug, became a lower base last month, having the opposite effect. The Oct 3-9 Reuters poll of 48 economists predicted retail inflation as measured by the CPI jumped to 5.04% in Sept from a year ago from 3.65% in Aug. Forecasts ranged from 3.60% to 5.40%. (Reuters).

New Zealand: Manufacturing PMI improves to 46.9 in Sept. The manufacturing sector in New Zealand continued to contract in Sept, albeit at a slower pace, the latest survey from BusinessNZ revealed with a manufacturing PMI score of 46.0. That's up from the upwardly revised 46.1 in Aug (originally 45.9), although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction. Among the individual components, production (48.0), employment (4.6.6), new orders (47.8), finished stocks (4.6.6) and deliveries (45.6) all remained in contraction. "While all sub-indices remain well below their historical average, four of the five series have moved closer to breakeven in the last three months since June," said BNZ Senior Economist Doug Steel. (RTT)

Singapore: MAS to hold currency settings in face of sticky prices. Singapore is set to buck the global easing trend and keep its policy bearings on hold as officials use the strength of the currency to tackle still-exorbitant living costs. The MAS is expected to keep the slope, center and width of its currency band steady, though policymakers may strike a dovish tone to pave the way for a shift in stance next year when price pressures abate. All but three economists in a Bloomberg survey see no change to policy. UOB Ltd is one of the handful of analysts who expect an early pivot to easing. While central banks in the US, EU and parts of Asia have begun cutting interest rates as inflation drops from its postpandemic peaks, the deceleration in consumer prices has slowed in Singapore, which imports the lion’s share of basic goods. The MAS uses the exchange rate rather than interest rates to control price growth, guiding the local dollar against a basket of currencies to crimp the cost of imports. (Bloomberg)

Markets

SHH Resources: Diversifies into food industry via 51% stake buy in health foods firm. SHH Resources Holdings said it is diversifying into the food industry by acquiring a majority stake in a health foods and frozen fruits company. "The food industry in Malaysia has significant growth potential due to rising global demand and strong government support," said SHH. The group has proposed to buy a 51% stake in Food Wise Network SB for RM7.3m from Ang Seok Hong and Abdul Latif Mohd Nasir, who hold 41% and 10% shareholdings in the company, respectively. The transaction is expected to be completed by July 2025. (The Edge)

Public Bank: To acquire 44.15% stake in LPI Capital For RM1.72bn in cash. Public Bank Bhd has proposed to acquire a 44.15% stake in LPI Capital, comprising 175.9m shares, for RM1.72bn in cash. MD and CEO Tan Sri Tay Ah Lek said the proposed acquisition would provide a comprehensive complementary service to the bank’s current financial services. “This proposed acquisition is also in line with the group’s plan to expand beyond just organic growth, but through strategic acquisitions,” he told a press conference. (Bernama)

KJTS: Wins RM12m contract for data centre work in Selangor. KJTS Group Bhd has landed sub-contract works worth RM12.3m from a Sunway Construction Group (SunCon) joint venture (JV) for a data centre in Selangor. KJTS said its subsidiary KJ Technical Services SB has received a letter of award from Sunway Engie DC SB for the supply, delivery, installation, testing, and commissioning of air-conditioning and mechanical ventilation (ACMV) pipework. The one stop integrated building support services provider will begin work on 11 Sept and was expected to be done by 27 Nov 2026. (The Star)

Sunway: Wins development project in Singapore. Sunway via its indirect wholly owned subsidiary Sunway Developments Pte Ltd and Hoi Hup Realty Pte Ltd, has been awarded 2.35ha at Tampines Street 94, from the Housing and Development Board of Singapore for a 99-year lease-term mixed commercial and residential development at SGD668.3m. Sunway stated that a joint-venture company will be incorporated between Hoi Hup and SDPL to undertake the development, with each holding a stake of 65% and 35% respectively. Hoi Hup is a Singapore-incorporated firm involved in real estate development with a paid-capital of SGD3m. The project will commence from 10 Oct 2024 and is expected to be completed by 84 months. (The Star)

Sapura Resources: Issues show cause letters to Shahriman, appoints Reza Abdul Rahim as acting MD. Sapura Resources said that it has issued show cause letters to its managing director Datuk Shahriman Shamsuddin and appointed a new acting MD. Shariman "remains on leave of absence", the company said. This confirms a report by The Edge that Shahriman's leave has been extended. The filing did not reveal the duration of Shahriman's leave of absence, but The Edge, citing sources, said the leave has been extended for another month. "Pursuant to the investigative proceedings conducted by the company in respect of matters relating to Datuk Shahriman's contract of employment, show cause letters have been issued to Datuk Shahriman," said Sapura Resources. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower today as US stocks edged back from their records Thursday after reports showed inflation was a touch warmer last month than expected and more workers filed for unemployment benefits last week. The S&P 500 slipped 0.2%, and the Dow Jones Industrial Average dipped 57 points, or 0.1%, after it likewise set an all-time high the day before. The Nasdaq composite edged down by 0.1%. Thursday’s report showed inflation slowed to 2.4% in September from 2.5% in August, according to the consumer price index, but economists were expecting an even sharper slowdown to 2.3%. And after ignoring the swings for food, gasoline and other energy prices, underlying trends that economists say can be a better predictor for where inflation is heading were a touch hotter than expected. At the same time, a separate report showed 258,000 US workers filed for unemployment benefits last week. That number is relatively low compared with history, but it was a sharper acceleration than economists expected. Hurricane Helene and a strike by workers at Boeing may have helped make the number look worse. In stock markets elsewhere, Hong Kong’s Hang Seng jumped 3% for its latest sharp swing. After rising on hopes for stimulus to prop up the world’s second-largest economy, Chinese stocks slumped earlier this week on disappointment that more isn’t on the way. But there’s still hope that more may come. Back home, the FBM KLCI added 6.03 points or 0.33% to 1640.94.

Source: PublicInvest Research - 11 Oct 2024