HEADLINES Economy

US: Labor market still tight; trade seen subtracting from Q1 growth. The number of Americans filing new claims for unemployment benefits increased to a two-month high last week, though labor market conditions remain fairly tight. The weekly claims report from the Labor Department also showed fewer people remaining on jobless rolls towards the end of March, suggesting that laid-off workers continued to find work, just not as easily as two years ago. Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 221,000 for the week ended March 30, the highest level since late Jan. Economists polled by Reuters had forecast 214,000 claims in the latest week. Claims had bounced around between 210,000 and 212,000 for much of March. (Reuters)

US: Trade deficit widens in Feb on strong imports. The US trade deficit widened for a second straight month in Feb as an increase in exports to a record high was offset by surging imports, suggesting trade could be a drag on economic growth in the first quarter. The trade deficit increased 1.9% to USD68.9bn, the Commerce Department's Bureau of Economic Analysis said. Data for Jan was revised slightly to show the trade gap rising to USD67.6bn instead of USD67.4bn as previously reported. (Reuters)

EU: ECB policymakers increasingly confident of inflation falling to 2% target. The ECB’s rate-setters were increasingly confident of inflation on track to reach the 2% target, but saw the need for patience even as they agreed the scope for an interest rate cut has strengthened, minutes of the March 6-7 policy session showed. Members agreed that there was no room for complacency as they assessed that the disinflationary process remained fragile even as it was solid and robust, and conditional on a number of benign assumptions about wages, profits and productivity. (RTT)

EU: Long shadow of Fed to fall on ECB after Lagarde’s first cut. The ECB insists it won’t take any cues from the Federal Reserve as it prepares to start cutting interest rates first, but its subsequent policy path may well be shaped by what happens in the US all the same. Trends driving the world’s largest economy usually don’t take long to spill into other regions, impacting financing conditions and exchange rates almost immediately and inflation, trade and other metrics further out. (Bloomberg)

EU: Ireland jobless rate rises to 4.3%. Ireland's unemployment rate increased slightly in March after falling in the previous month, preliminary data from the Central Statistics Office showed. The seasonally adjusted unemployment rate rose to 4.3% in March from 4.2% in the prior month. In the corresponding month last year, the rate was 4.1%. The seasonally adjusted number of unemployed increased to 122,100 in March from 120,200 in Feb. A year ago, it was 112,700. Ireland's youth unemployment rate, which applies to the 15-24 age groups, remained stable at 10.5% in March. (RTT)

Australia: Apartment permits hit 12-year low due to cost blowouts. Australian apartment approvals tumbled to a 12-year low in Feb as capacity constraints and rising costs weigh on construction, right at a time when a surging population requires more homes be built. Private sector dwellings excluding houses plummeted 24.9% to 3,771, the fewest since Jan 2012, government data showed. Total building approvals, including houses, slid 1.9% in Feb while January’s result was downgraded to a 2.5% fall from 1% previously. In total 12,520 dwellings were approved, almost half the March 2021 peak. (Bloomberg)

India: Services growth improves on robust demand. India's service sector activity expanded at one of the strongest paces in thirteen-and-a-half years, led by healthy demand conditions, flash survey data from S&P Global showed. The flash HSBC services PMI rose to 61.2 in March from 60.6 in Feb. A score above 50 indicates expansion in the sector. March saw one of the strongest expansions in total sales and business activity in close to 14 years, helped by a series-record upturn in new export orders, the survey said. Export demand was more evident in Africa, Asia, Australia, Europe, the Americas, and the Middle East. On the price front, input price inflation remained marked amid higher labour and material costs. (RTT)

Markets

DRB-Hicom (Neutral, TP: RM1.70): Declare dividends. DRBHicom has announced a final dividend of 2.5 sen per share for the financial year ended 31 Dec 2023. The dividend will have to be approved by shareholders at its forthcoming AGM. (StarBiz)

MN Holdings: Secures RM26m solar plant substation job from Samaiden. MN Holdings (MNHB) has secured a contract worth RM26m for the engineering, procurement, construction and commissioning work for a large-scale solar photovoltaic plant in Kulim, Kedah. The contract was awarded to its wholly owned subsidiary MN Power Transmission SB by Samaiden SB, a wholly owned subsidiary of Samaiden Group. The contract involves establishing new step-up station interconnection facilities for the large-scale solar substation, as well as extending one bay of 132kV interconnection facilities at the existing 132kV NUR Power Station for NUR Renewables SB. The contract is set to span 11 months with the commencement date on 1 April. Previously, MN Holdings secured two substation engineering contracts worth RM29.3m from TNB and one underground cable contract worth RM13.5m from a customer that provides data center services. (The Edge)

Crescendo: To dispose of JB land for RM132.5m. Crescendo Corp’s wholly owned subsidiary Panoramic Industrial Development SB (PID) has entered an agreement to dispose of about 102,558.3sqm of freehold industrial land in Pulai, Johor Bahru, to Microsoft Payments (Malaysia) SB for RM132.5m. The disposal is on an as is where is basis, free from all and any encumbrances and with vacant possession, subject to pre-closing works, post-closing works and other terms and conditions of the sales and purchase agreement (SPA). The land was purchased for RM11m on 14 Dec 2009. As at 31 Jan 2023, the total cost of investment, including transaction costs and development costs incurred and capitalised by PID on the land is RM17.1m. (StarBiz)

Sapura Energy: Secures award for Pan Malaysia underwater services from Shell. Sapura Energy's wholly owned subsidiary Sapura Subsea Services SB has secured a contract for the provision of Pan Malaysia underwater services for Petronas Group of Companies and petroleum arrangement contractors by Sarawak Shell (SSB) and Sabah Shell Petroleum Company Ltd (SSPC). The contract takes effect from 31 Jan 2024, for a period of five years. The contract is a call-out contract with agreed unit rates. The scope of work comprises of the provision of Diving Support Vessel, Air and Saturation Diving Systems, Remotely Operated Vehicle and other related underwater services which includes subsea inspection, repair and maintenance of offshore structures, pipelines and other equipment, abandonment, intervention, subsea decommissioning and other works related to SSB’s and SSPC’s underwater facilities in Sabah and Sarawak waters. (StarBiz)

SBH Marine: Set to ride on growing frozen seafood market. SBH Marine is optimistic about its prospects as it is well placed to benefit from the expected growth in frozen seafood market. SBH Marine attributed this optimism to several factors including the decline in wild fisheries, rising consumer health consciousness, a growing global population and increased consumer prosperity. The group reported its unaudited financial results for the 4Q 2023, recording RM47.1m in revenue and RM4.1m in earnings. (StarBiz)

MARKET UPDATE

The FBM KLCI might open lower today after the three major US stock indices fell more than 1 % each and the S&P 500 had its biggest daily percentage drop since February 13 yesterday as Federal Reserve officials took a cautious approach in comments on the outlook for interest rate cuts, and investors braced for today's US monthly jobs report. Investors also digested comments from US President Joe Biden, who called for an immediate ceasefire in a call with Israel Prime Minister Benjamin Netanyahu over the Gaza war. Oil prices climbed amid the geopolitical tensions. The Dow Jones Industrial Average fell 530.16 points, or 1.35%, to 38,596.98, the S&P 500 lost 64.28 points, or 1.23%, to 5,147.21 and the Nasdaq Composite dropped 228.38 points, or 1.4%, to 16,049.08. European stocks edged higher on Thursday, led by cyclical sectors such as miners and automakers, as investors were encouraged by signs of recovery in the euro zone economy as well as inflation getting under control. The continent-wide STOXX 600 index closed up 0.2%, led by a 1.7% gain in the basic resources sector as copper prices hit their highest in more than 14 months.

Back home, Bursa Malaysia rebounded strongly to end higher on Thursday, making a swift recovery of its losses from the previous session, supported by mostly upbeat regional markets. At the closing, the FBM KLCI surged 16.23 points, or 1.05%, to 1,553.24 from Wednesday’s close of 1,537.01. Japan's Nikkei share average ended higher on Thursday, as investors scooped up stocks following a heavy profit-booking sell-off earlier this week as the new financial year started. The Nikkei 225 rose 0.81% to close at 39,773.14, after rising as much as 2% to cross 40,000. South Korean KOSPI closed up 35.04 points, or 1.29%, at 2,742.01, following its 1.68% drop on Wednesday.

Source: PublicInvest Research - 5 Apr 2024