HEADLINES

Economy

US: Weekly jobless claims unexpectedly fall. The number of Americans filing new applications for unemployment unexpectedly fell, but could remain elevated in the near-term amid the effects of Hurricanes Helene and Milton, obscuring the labor market picture. Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 241,000 for the week ended Oct 12, the Labour Department said. Economists polled by Reuters had forecast 260,000 claims for the latest week. Claims jumped to more than a one-year high in the prior week, attributed to Helene, which devastated Florida and large swathes of the US Southeast in late Sept. The ebb in filings from Helene is likely to be offset by an anticipated deluge of claims due to Milton, which slammed into Florida weeks after Helene. (Reuters)

EU: ECB to step up pace with back-to-back rate cuts; decision guide. The ECB is set to lower interest rates for a second straight meeting, quickening the speed of cutting after data showed that the rapid retreat in inflation is being accompanied by a deteriorating economy. Just after the last reduction, analysts polled by Bloomberg unanimously predict that the deposit rate will be decreased by another 25bps, to 3.25%. While inflation is now below 2% for the first time since 2021, it’s more the bleaker outlook for the eurozone economy that’s hastening what was thought to be a quarterly rhythm for trimming borrowing costs. (Bloomberg)

EU: Eurozone inflation eases to 1.7% in Sept. Eurozone inflation eased slightly more than initially estimated in Sept, raising expectations for a 25bps rate cut by the ECB later today. The harmonized index of consumer prices posted an annual increase of 1.7% in Sept, which was revised down from 1.8% estimated on Oct 1, final data from Eurostat showed. A month ago, inflation stood at 2.2%. Inflation fell below 2% target for the first time since June 2021. (RTT)

EU: Denmark's central bank cuts key interest rate to 2.85%, mirroring ECB. Denmark's central bank cut its key policy interest rate by 25bps to 2.85% as expected, following the ECB's decision earlier in the day to reduce eurozone rates. "The interest rate reduction is a consequence of the reduction by the ECB of its main monetary policy rate, the deposit facility rate, by 0.25ppt," Danmarks Nationalbank said in a statement. "Thereby, the monetary policy spread vis-á-vis the euro area will remain unchanged," it added. The primary mandate of the Danish central bank is to keep the crown currency stable versus the euro, an objective it upholds through currency interventions and interest rate moves. (Reuters)

China: Economy likely grew at weakest pace in six quarters. China’s economy likely grew at its weakest pace in six quarters, prompting Beijing to roll out a swath of stimulus measures in late Sept to draw a line under the slowdown. Data show the economy expanded 4.5% in the 3Q from a year ago, according to economists surveyed by Bloomberg. That would be the least since March 2023, though it should keep expansion for the first nine months at 4.9%, in line with Beijing’s annual goal of around 5%. (Bloomberg)

South Korea: Weakening Korea chip exports may support faster BOK rate cuts. South Korea’s chip exports dropped in real terms last quarter, posing a risk to the nation’s economic growth outlook, according to a Bloomberg Economics analysis that lends support to views that the central bank may accelerate its interest rate-cutting cycle next year. Semiconductor exports fell 7.6% and 7.5% from a year earlier in Aug and Sept, after adjustment for price changes, dragging down the overall third quarter figures by 5.3%, according to a report by BE economist Hyosung Kwon. (Bloomberg)

Australia: RBA rate cut unlikely before Q1 2025. The RBA is unlikely to cut its interest rates before the 1Q of 2025 as the labour market conditions are still tight relative to full employment, Abhijit Surya, an economist at Capital Economics, said. Data from the Australian Bureau of Statistics showed that the unemployment rate held steady at 4.1% in Sept. The number of unemployed declined by 9,200 and employment increased 64,100 from the previous month. The participation rate rose to a record high 67.2%. The economist noted that the employment growth is all but guaranteed to overshoot the central bank's year-end forecast of 1.9%. (RTT)

Markets

Varia: Bags RM572m Socso job. Varia has secured a RM571.8m contract from the Social Security Organisation (Socso) to build a rehabilitation centre at Setiu, Terengganu. Varia’s wholly owned subsidiary, Pembinaan Teguh Maju SB, received the LoA for the 30-month contract, commencing from 29 Oct 2024 until 28 April 2027. The new project provides Varia with an opportunity to replicate its past track record from building a rehabilitation centre in Perak. With the inclusion of the new project, Varia’s order book value has increased to RM3.1bn. (StarBiz)

Salcon: Wins RM18.5m F&N contract. Salcon has won a RM18.5m contract to provide external water reticulation works for Fraser & Neave Holdings’ (F&N) dairy farm in Gemas, Negri Sembilan. Its subsidiary, Salcon Engineering, has accepted an LoA issued by LTE Engineers SB on behalf of F&N AgriValley SB. The contract, which will commence on 21 Oct will involve two sections. The construction of Section One is expected to be completed within 13 months by 19 Jan 2025. Meanwhile, Section Two is scheduled to be completed in 26 weeks by 20 April 2025. (StarBiz)

LKL: Expands into Indonesia's medical equipment and furniture market via JV. Medical equipment and furniture manufacturer LKL International has announced a proposed JV with PT Fasilitas Teknologi Nusantara (Fastech) to expand into the Indonesian healthcare market. The JV will primarily engage in the business of manufacturing, selling, trading and distribution of medical equipment, medical devices and medical furniture in Indonesia. Fastech is principally engaged in the business of providing workforce solutions in Indonesia that specialises in providing high quality labour resources. (The Edge)

LBS Bina: Embarks on eco-conscious township. LBS Bina Group officially launched a 315-acre premier development located in Genting Highlands, Pahang on 15 Oct. At 821m above sea level, the Rimbawan township is an eco-conscious sanctuary poised to generate a GDV of more than RM9.5bn, a master plan for integrating the community with the local ecosystem. (StarBiz)

SC Estate Builder: To bid for Sabah LSS power plant projects. SC Estate Builder and consortium partner JK Spark SB plan to bid for Sabah’s large-scale solar (LSS) power plant projects, initiated by the Energy Commission of Sabah (ECoS). The inaugural bidding process seeks to secure the development of LSS PV power plants with a total capacity of 100MW. The target is for the plants to begin operations in 2026. The consortium aims to bid for solar power projects with capacities ranging from 1 MWac to 15 MWac. (The Edge)

Bintai Kinden: Partners China-based firm to bid for construction projects. Mechanical and electrical engineering services provider Bintai Kinden Corp has joined forces with a China-based company to jointly bid for construction projects in Malaysia. It has entered into a MoU with Henan Province Installation Group (M) SB, a subsidiary of China's Henan Province Installation Group Co Ltd, which specialises in machinery installation and construction projects. The collaboration will target high-rise commercial and residential buildings, industrial facilities, data centres, as well as sub-stations and power distribution networks. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today after US stocks drifted around their record heights Thursday following the latest signals that the US economy continues to hum. The S&P 500 finished virtually unchanged after flirting with its all-time high for much of the day. The Dow Jones Industrial Average added 161 points, or 0.4%, to its own record set the day before, while the Nasdaq composite was close to flat. Nvidia and other companies in the chip industry were some of the market’s strongest after global heavyweight Taiwan Semiconductor Manufacturing Co. reported bigger profit for the latest quarter than analysts expected. TSMC credited strong demand related to smartphones and artificial intelligence, and its stock that trades in the United States jumped 9.8%. US retailers made more in sales in September than in August, and underlying growth trends within the data were better than economists expected. A separate report, meanwhile, said fewer US workers applied for unemployment benefits last week, a signal that layoffs nationwide are relatively low and aren’t damaging the job market. The European Central Bank on Thursday cut its main interest rate by a quarter of a percentage point. That helped send stock indices higher by 1.2% in France and 0.8% in Germany. They halted a run of losses that started the day in Asian stock markets, where Japan’s Nikkei 225 fell 0.7% and Hong Kong’s Hang Seng dropped 1%.Back home, the FBM KLCI rose 8.81 points or 0.54% to 1641.44. .44 yesterday. Market breadth turned positive as gainers outpaced decliners trend sideways between the 1636 and 1652 horizons in the near term, with , 1622 and 1600, while resistance levels stand at 1652, 1664 and 1680.

Source: PublicInvest Research - 18 Oct 2024