HEADLINES

Economy

US: Fed’s preferred inflation gauge set to back rate-cut patience. Fed officials are about to get further confirmation that progress against inflation has stalled, supporting what appears to be a shift in tone to keep interest rates higher for longer than previously anticipated. Policymakers’ preferred inflation gauge, the personal consumption expenditures price index, probably stayed elevated in March. The measure is seen accelerating slightly to 2.6% on an annual basis as energy costs rise. The core metric, which strips out energy and food, is expected to rise 0.3% from the prior month after a similar gain in Feb. (The Edge)

US: Existing home sales decline as rates keep buyers sidelined. Sales of previously-owned homes in the US fell in March from a one-year high, underscoring the lingering impact of high mortgage rates and elevated prices. Contract closings decreased 4.3% from a month earlier to a 4m annualised rate. The pace was in line with the median estimate of economists surveyed by Bloomberg. Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves. Mortgage rates have moved back above 7%, hindering recent momentum in the housing market. (Bloomberg)

EU: German government nudges up 2024 GDP forecast to 0.3%. The German government will raise its economic growth forecast for this year to 0.3%, from 0.2% previously, and lower its forecast for inflation by 0.4ppts. The forecasts are part of the government's draft spring projections. In 2025, the government expects GDP to grow by 1.0%. Inflation is expected to fall to 2.4% this year, versus a previous projection of 2.8%. For 2025, the government sees inflation falling further, to 1.8%. Economic experts from around the world expect inflation rates to decline in the years ahead. (Reuters)

EU: France orders retailers to display shrinkflation. French retailers will have to notify shoppers when products have been reduced in size without a corresponding cut in prices in an effort to tackle so-called shrinkflation. Shrinkflation has become a headache for consumers and governments alike as households have struggled to cope with dwindling purchasing power in the face of surging inflation in recent years. From July, French retailers will have to display for two months when food and other common consumer goods products like detergent have been downsized in a way that causes the unit price to go up. (Reuters)

EU: Spain trade gap narrows slightly. Spain's foreign trade deficit decreased somewhat in Feb from a year ago as imports fell slightly faster than exports. The trade deficit dropped to EUR2.4bn in Feb from EUR2.5bn in the corresponding month last year. In Jan, the shortfall was EUR3.7bn. Exports fell 3.0% YoY in Feb, faster than the 2.5% decline in the prior month. The decline in imports also deepened to 3.1% from 2.9%. On a monthly basis, exports climbed 5.6% to EUR31.8bn. This was the second-best figure in the historical series for the month of Feb. Imports were 0.9% higher compared to Jan. (RTT)

EU: Italy construction output falls 3.9%. Italy's construction output decreased for the first time in five months in Feb. Construction production declined 3.9% MoM in Feb, reversing a 3.0% increase in the previous month. The annual growth in construction output moderated a 9-month low of 5.9% in Feb from 13.3% a month ago. On an unadjusted basis, construction production increased at a slower rate of 10.2% a year, versus a 17.3% surge in Jan. (RTT)

UK: Retail sales stable in March. UK retail sales were unchanged on a MoM basis in March, defying expectations for a gain. Retail sales including automotive fuel grew 0.1% in the previous month. Economists were looking for a 0.3% gain for March. This was the weakest outcome since Dec, when sales shrunk 3.5%. Excluding auto fuel, retail sales decreased 0.3%, reversing a similar size gain from the previous month. This was the first decline in three months. Automotive fuel and non-food stores sales volumes grew 3.2% and 0.5%, respectively. (RTT)

UK: Slow growth, high debt - troubled economy awaits election winners. Britain's national election, expected later this year, will take place against a backdrop of persistently slow economic growth, high public debt and little room to increase spending for whoever wins power unless they raise taxes. Prime Minister Rishi Sunak promises voters that a recovery from a costof-living crisis is underway while the opposition Labour Party, which is far ahead in opinion polls, accuses his ruling Conservatives of overseeing 14 years of economic failure. (Reuters)

UK: Asking prices for homes close to record high. Prices of homes being sold in Britain are close to their record highs after the biggest annual increase in a year, according to an industry survey that suggested the momentum in the housing market of early 2024 extended into April. Its asking prices for residential properties rose by 1.7% in the four weeks to April 13 when compared with the same period last year. Prices sought by sellers rose by 1.1% in MoM terms, slowing from a 1.5% increase in the previous four weeks. The average new seller asking prices of GBP372,324 (USD463,320) was only GBP570 of a record hit in May 2023. Other measures of Britain's housing market have also shown a recovery in demand and prices, helped by a fall in borrowing costs which surged in 2022. (Reuters)

Japan: March core inflation slows, weak yen complicates BOJ move. Japan's core inflation slowed in March and an index gauging broader price trends fell below 3% for the first time in over a year, as analysts say yen weakness could complicate the central bank's policy deliberations. The nationwide core consumer price index (CPI), which excludes fresh food items but includes energy items, rose 2.6% in March from a year earlier, matching median market forecasts. (Reuters)

Markets

MISC: Seals contracts with Petco for world's first ammonia dual-fuel Aframaxes. MISC's petroleum arm AET has entered into time charter party contracts with Petco Trading Labuan Company Ltd for the world's first two ammonia dual-fuel Aframaxes. Through these vessels, Petco will be able to transport its products to customers around the world while contributing to the industry decarbonisation by utilising ammonia as the cleaner alternative to conventional fuel. (New Straits Times)

Gas Malaysia: Distribution adjusts tariff down. Gas Malaysia's wholly-owned subsidiary, Gas Malaysia Distribution SB (GMD) will adjust its rate by RM0.045 per gigajoules (GJ) per day through a rebate to its base average tariff for 1 Jan- 31 Dec, 2024. Therefore, GMD’s allowed average tariff under the incentive-based regulation (IBR) for all types of utilisations is RM1.528/GJ per day during the period, "Gas Malaysia wishes to clarify that the tariff approval is not applicable to the sales of liquefied petroleum gas supplied in gas cylinders or bulk supply. (Bernama)

Genting Plantations: Expects demand for palm products to advance in 2024. Demand for palm products is projected to advance due to better economic conditions in 2024. Genting Plantations chairman Datuk Seri Mohd Zahidi Zainuddin said it will continue to be supported by the price competitiveness of crude palm oil (CPO) against other vegetable oils. "Palm oil prices are expected to be well supported at current levels in 2024 due to the seasonally low output cycle during the first half as well as overall supply constraints with Indonesia increasing local consumption for the food and biodiesel industry," he said. (Bernama)

HPP Holdings: Posts first-ever quarterly loss of RM62,200 since listing. HPP Holdings slipped into the red in the third quarter ended February 29, 2024 (3QFY2024) for the first time since its listing on the ACE market in January 2021, mainly due to commission payments of RM520,000 and a one-time compensation payment of RM400,000 to foreign workers, in line with the group's adherence to its zero recruitment fee policy. (The Edge)

RGB International: Acquires 20% stake in gaming machine leasing deal worth RM10m. RGB International (RGBI) has approved the acquisition of a 20% participation interest in a product leasing agreement (PLA) from Timor Holding SA (THSA) by its wholly-owned subsidiary, RGB Ltd. This related party transaction involves the acquisition of 86 units of electronic gaming machines in exchange for a share in rental revenues, with a purchase consideration valued at approximately RM9.82m. (The Malaysian Reserve)

EG Industries: Expands partnership with US-based R&D firm. EG Industries has signed a second letter of intent with US-based Cambridge Industries Group (CIG) to produce the next-generation 1.6T advanced high-speed optical signal transmitter and receiver for 5G wireless networks at EG Industries’ new Smart Factory 4.0 in Penang (PG2). In a statement, EG Industries said the 1.6T photonics optical modules represent the industry’s latest advancement, enabling high-speed data transmission in 5G wireless networks for automation and Artificial Intelligence (AI) applications. (The Star)

MARKET UPDATE

The FBM KLCI might open lower today after the Nasdaq and the S&P 500 ended lower last Friday as Netflix shares weighed, but American Express kept the Dow afloat after quarterly earnings from both companies, while growing pessimism that the Federal Reserve would cut interest rates soon also dented sentiment. Netflix slumped as one of the bigger drags on the benchmark S&P index and Nasdaq after the video streaming company’s secondquarter revenue view fell short of analysts’ expectations while the company also unexpectedly said it would no longer provide subscriber counts. The Dow Jones Industrial Average rose 211.02 points, or 0.56%, to 37,986.40, the S&P 500 lost 43.89 points, or 0.88%, to 4,967.23 and the Nasdaq Composite lost 319.49 points, or 2.05%, to 15,282.01. European shares touched their lowest level in more than a month but closed well off their intraday trough as anxieties over strife in the Middle East eased and solid earnings provided some support. The pan-European STOXX 600 index 0.08%.

Back home, Bursa Malaysia ended the week mixed on Friday with buying in selected heavyweights and commodity-related stocks amid the negative sentiment on regional markets. At the closing, the FBM KLCI rose 2.81 points, or 0.18%, to 1,547.57 from Thursday's close of 1,544.76. Emerging market stocks lost 1.30%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.61% lower, while Japan's Nikkei lost 2.66%.

Source: PublicInvest Research - 22 Apr 2024