HEADLINES

Economy

US: Economy on solid ground as weekly jobless claims fall, home sales surge. The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, while sales of previously owned homes increased by the most in a year in Feb, signs the economy remained on solid footing in the first quarter. That was underscored by other data showing business activity stable in March, though inflation picked up. Even a gauge of future economic activity turned positive in Feb for the time in two years. The US continues to outshine its global peers, thanks to labor market resilience. (Reuters)

EU: Russia central bank keeps key rate unchanged at 16%. Russia's central bank left its key interest rate steady at its March meeting, as widely expected, as policymakers assessed inflation remains high despite a gradual easing. The board of directors of the Bank of Russia, headed by Governor Elvira Nabiullina, decided to hold the key rate at 16%. The return of inflation to target in 2024 and its further stabilisation close to 4% assume that tight monetary conditions will be maintained in the economy for a long period. Monetary conditions are tightening following the rate hike in the second half of 2023, the bank observed. (RTT)

EU: Ireland wholesale price inflation rises to 3.3%. Ireland's wholesale prices increased for the third straight month in Feb to the highest level in one year, data from the Central Statistics Office showed. Output prices in the manufacturing industry rose 3.3% YoY in Feb, faster than the 2.2% increase in Jan. Further, this was the quickest rate of increase since Feb 2023, when prices had risen 3.6%. Factory gate prices for chemicals and chemical products alone grew by 22.2% annually in Feb, and those for beverages rose by 11.0%. Prices for fish and fish products were 7.0% higher. (RTT)

EU: Greece current account swings to surplus in Jan. Greece's current account turned to a surplus in Jan from a year ago, mainly due to an improvement in the secondary income account, data from the Bank of Greece showed. The current account balance of the country turned to a surplus of EUR1.76bn from a deficit of EUR161.5m in the corresponding month last year. The visible trade deficit rose to EUR2.69bn from EUR2.47bn last year, reflecting a larger drop in exports than in imports. (RTT)

UK: Easing UK inflation keeps BoE on track for rate cuts later in 2024. British inflation slowed in Feb, keeping the BoE on track to start cutting interest rates in the months ahead and offering some better economic news to Prime Minister Rishi Sunak before an election expected later this year. Consumer prices rose by 3.4% in annual terms after a 4.0% increase in Jan, the weakest rate of inflation since Sept 2021, official data showed. A Reuters poll of economists and the BoE's own forecast published last month had pointed to an annual rate of 3.5%. Food and prices at eateries were the biggest downward drags, offset by motor fuels. (Reuters)

UK: Retail sales stable amid wet weather. UK retail sales steadied in Feb after rebounding at the start of the year, as poor weather lead to a reduction in footfall, data released by the Office for National Statistics showed. Retail sales were unchanged from Jan, when they expanded by a revised 3.6% in Jan. Sales were forecast to fall 0.4%. Sales volumes in clothing and department stores increased due to new collections but falls in food stores and fuel retailers offset this growth. Food store sales decreased 0.3% and auto fuel sales were down 1.3%. Meanwhile, non-food store sales advanced 0.7%. Excluding auto fuel, retail sales volume posted a slower monthly growth of 0.2% after climbing 3.4% in Jan. On a yearly basis, overall retail sales volume fell 0.4%, in contrast to the 0.5% increase. Sales were forecast to drop 0.7%. (RTT)

Japan: Inflation rose for the 1st time in 4 months in Feb. Japan's inflation rate rose for the first time in four months in Feb, official data released by the Ministry of Internal Affairs and Communications shows. In the first release of monthly inflation data since the BoJ moved away from negative interest rates, the country's core CPI, which excludes fresh food, rose 2.8% from a year earlier, up from 2% in Jan. The gain came with energy subsidies introduced by the government in Feb 2023 losing their effect to mask overall price increases. Hotel rates increased 33.3% in Feb due to Japan becoming a hot tourist destination. Electricity bills, meanwhile, fell only 2.5%, versus a 21% drop in Jan. (Nikkei Asia)

Japan: BOJ pivot no fright for euro zone bonds. Japanese investors are finally being paid to park their cash back home, a move that might be expected to spook euro zone markets where they're a big force but could ironically prop up demand instead as ECB rate cuts loom. Stuck with negative rates for two decades, Japanese investors have ploughed into bond markets globally. They are the biggest foreign holders of US Treasuries. They also have a sizeable presence in the euro zone, where they hold around 1% of the overall bond markets in countries like France, Belgium and the Netherlands, BofA estimated last year. With French governments bonds a top pick, their share of that market is likely higher. (Reuters)

Taiwan: Unemployment rate inches higher to 3.39%. The nation’s unemployment rate last month rose 0.08ppts to 3.39%, as firms shed temporary staffers and discontented workers chose to move on. Despite the mild uptick, the latest jobless rate represented the lowest level for the same period in 24 years. It is common for companies to end temporary positions intended to meet the pickup in demand over the Lunar New Year holiday. The reading after seasonal adjustments increased 0.01ppts to 3.4%, suggesting a stable market. The newly launched unemployment rate for the past four weeks grew 0.07ppts to 3.42%, affirming the upward trajectory, DGBAS data showed. The domestic job market is stable and healthy (Taipei Times)

Markets

Velesto Energy: Gets contract extension for three jack up drilling rigs to Petronas Carigali. Velesto Energy’s subsidiary Velesto Drilling SB has received a two-year contract extension for use three of its jack up drilling rigs Naga 2, Naga 4, and Naga 6 from Petronas Carigali SB. The company said inclusive of its current drilling campaign assigned between 2023 and 2024, the jobs are worth a collective RM1.25bn (USD265m). The contract extension starts on 7 Feb, 2024, and runs until 6 Feb, 2026, Velesto said in a filing to Bursa Malaysia. Velesto said the contract's extension highlights strong utilisation of Velesto's rigs for 2024. (New Straits Times)

Astino: Sees fourfold jump in 2Q profit on stronger sales, profit margin. Astino Bhd reported a fourfold surge in its net profit for the second quarter of financial year 2024 from a year earlier, on stronger sales and profit margin. Net profit for the three months ended 31 Jan, 2024 (2QFY2024) jumped to RM11.8m from RM2.95m in 2QFY2023, while revenue grew 18% to RM169.2m from RM143.3m. Moving forward, Astino said it is cautiously optimistic of achieving a more sustainable performance as market demand for its product continues to remain firm, though it flagged escalating input costs and the weakening ringgit versus the US dollar. (The Edge)

Capital A: ADE expects to double its revenue with new KLIA hangar facility. Asia Digital Engineering (ADE) is well positioned for substantial growth in the coming years as plans are underway to establish a new maintenance, repair and overhaul (MRO) hangar facility at the Kuala Lumpur International Airport (KLIA), its chief executive officer (CEO) Mahesh Kumar said. (Bernama)

NTPM: Registers turnaround in 3Q on higher sales, lower materials cost. NTPM Holdings reported turnaround in its net profit for the third quarter of financial year 2024 (3QFY2024) from a year earlier, on the back of higher sales and decreased materials cost. Net profit for the three months ended 31 Jan, 2024 stood at RM6.3m or 0.56 sen per share, compared to a net loss of RM7.3m or 0.65 sen per share in 3QFY2023. Quarterly revenue rose 11.75% to RM241.1m from RM215.7m in 3QFY2023. Moving ahead, NTPM aims to remain profitable in the coming quarter, amid the positive results recorded, that was driven by the adjustment in its market strategy. “These include lowering its product prices, appealing to a broader customer base, increasing customer interest and fostering brand loyalty, among others,” NTPM said. (The Edge)

Yinson: 4Q earnings surge by 63% on charter rate rise. Yinson net profit for the fourth quarter ended 31 Jan 2024 (4Q24) surged by 62.5% to RM278m, primarily attributed to charter day rate escalation. However, this increase was partially offset by lower contributions from engineering, procurement, construction, installation, and commissioning (EPCIC) business activities, along with a rise in finance costs. Quarterly revenue also saw a notable increase, reaching RM2.7bn compared to RM1.96bn in the same period the previous year. Yinson declared a dividend of 1 sen for the quarter, bringing the full-year dividends to 2 sen. For the 12 months period (FY2024) its net profit soared 63% to RM964m from RM589m a year earlier, driven by a significant increase in revenue to RM11.65bn compared to RM6.32bn. (The Malaysian Reserve)

MARKET UPDATE

The FBM KLCI might open flat today after the S&P 500 ended little changed last friday, but the index registered its biggest weekly percentage gain of 2024 after the Federal Reserve this week stuck with projections for three interest rate cuts by year’s end. The Nasdaq ended slightly higher for the day, along with an index of semiconductors. The semiconductor index was also up sharply for the week amid continued optimism over artificial intelligence. The Dow ended lower on the day. The Dow Jones Industrial Average fell 305.47 points, or 0.77%, to 39,475.90, the S&P 500 lost 7.35 points, or 0.14%, to 5,234.18 and the Nasdaq Composite gained 26.98 points, or 0.16%, to 16,428.82. Europe's STOXX 600 fell 0.03%, after touching a new all-time high, while London's FTSE 100 rose 0.6%, helped by expectations that the Bank of England(BoE) would cut rates sooner than previously thought.

Back home, Bursa Malaysia managed to recover from earlier losses to end the week marginally higher on Friday on late buying, despite the mostly downbeat performance in regional markets. At the closing bell, the FBM KLCI inched up by 0.98 of a point to 1,542.39 from Thursday’s close of 1,541.41. China's yuan dropped sharply during Asian trading, hitting a four-month low, in a move analysts attributed to rising expectations that there will be more monetary easing to prop up the country's economy. The offshore yuan was priced at 7.2759 per dollar in late US trade. The sudden move knocked the Shanghai Composite index down 0.95%. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.1%, while Japan's Nikkei rose 0.18% to a record-high close.

Source: PublicInvest Research - 25 Mar 2024