HEADLINES Economy

US: Weekly jobless claims rise, 1Q labour costs revised lower. The number of Americans filing new claims for unemployment benefits increased last week and unit labour costs rose by less than previously thought in the first quarter, indicating the labour market is cooling but not enough to allay the Federal Reserve's hesitance to begin cutting interest rates. Initial claims for state unemployment benefits rose 8,000 to a seasonally adjusted 229,000 for the week ended June 1, the Labor Department said. Economists polled by Reuters had forecast 220,000 claims in the latest week. The labour market has been steadily rebalancing back toward pre-pandemic levels after the Fed raised interest rates by roughly 525 basis points since March 2022 to slow demand in the overall economy. (Reuters)

US: Trade gap widens to USD74.6bn, largest since Oct 2022. The US trade deficit widened in April to the largest since Oct 2022 on a surge in imports of goods including motor vehicles, computers and industrial supplies. The gap in goods and services trade grew 8.7% from the prior month to USD74.6bn (RM350.5bn), Commerce Department data showed. The median estimate in a Bloomberg survey of economists called for a USD76.5bn gap. The value of imports rose 2.4% to the highest since mid-2022, while exports edged up 0.8%. The figures aren’t adjusted for inflation. (Bloomberg)

EU: Retail sales fall more than expected. Eurozone retail sales fell more than expected in May, data from Eurostat revealed. Retail sales posted a monthly fall of 0.5% in April, in contrast to the revised 0.7% increase in March. Economists had forecast a 0.3% drop. Sales of food, drinks and tobacco eased 0.5% and that of non-food products edged down 0.1%. Sales of automotive fuel in specialized stores decreased 2.2%. On a yearly basis, retail sales remained flat after a 0.7% gain. Sales were forecast to grow 0.1% in April. (RTT)

EU: ECB cuts rates even as inflation fight goes on. The ECB went ahead with its first interest rate cut since 2019, citing progress in tackling inflation even as it acknowledged the fight was far from over. In new forecasts released with the widely flagged rate cut, the ECB said it expected inflation to average 2.2% in 2025 — up from a previous estimate of 2.0% and meaning it was now seen holding above the central bank's 2% target well into next year. Inflation in the 20 countries that share the euro has fallen to 2.6% from more than 10% in late 2022, largely thanks to lower fuel costs and an easing of post-pandemic supply snags. (Reuters)

EU: German manufacturing orders log surprise fall. Germany's factory orders posted an unexpected decline in April on sharp reduction in large-scale orders, data from Destatis showed. Factory orders dropped 0.2% MoM in April, confounding expectations for an increase of 0.3%. Orders had declined over the last four months. Nonetheless, the latest pace of decline was slower than the revised 0.8% fall posted in March. Moreover, when large-scale orders were excluded, new orders advanced 2.9% from the previous month. (RTT)

UK: Construction growth fastest in nearly two years. The UK construction sector logged its fastest growth in two years in May with activity and new orders increasing at sharper rates, survey results from S&P Global showed. The construction Purchasing Managers' Index rose unexpectedly to 54.7 in May from 53.0 in April. The reading was forecast to fall to 52.5. The survey showed that all three monitored categories reported growth for the first time since May 2022 as housing activity returned to growth. Commercial construction activity growth accelerated to a two-year high in May. (RTT)

Taiwan: Inflation rises to 2.24%, highest in 3 months. Taiwan consumer price inflation accelerated in May to the highest level in three months amid a rise in food costs, data released by the Directorate General of Budget, Accounting, and Statistics showed. The consumer price index, or CPI, rose 2.24% YoY in May, faster than the 1.94% rise in April. Economists had forecast inflation to climb to 2.20%. Food inflation increased to 3.43% from 2.58%. Housing costs also increased at a faster pace of 2.32% versus a 2.07% rise seen in April. (RTT) Markets

Tasco: To invest additional RM400m to expand warehouse capacity over next two years. Integrated logistics solutions provider Tasco plans to invest an additional RM400m from now to 2026 to expand its warehouse capacity. Executive chairman and substantial shareholder Lee Check Poh said the group has so far invested RM300m in the expansion of its warehouses, exceeding the minimum RM240m investment in capital expenditure to qualify for the income tax exemption under the Malaysian Investment Development Authority’s (Mida) integrated logistics services (ILS) scheme. (The Edge)

TAFI Industries: Unit disposes of Muar property for RM12m. TAFI Industries' wholly-owned unit, TA Furniture & Projects SB (TAFPSB) is disposing of one of its industrial premises comprising a factory annexed with a storey office in Muar, Johor for RM12m. In a statement, TAFI said its TAFPSB has entered into a sale and purchase agreement with Comfy Factor SB & NNST Capital SB for the disposal, which will realise a gain after Real Property Gains Tax (RPGT) of some RM8.1m, based on the net book value of RM3.1m as at March 31, 2024. The single storey detached factory was primarily used for furniture manufacturing. (The Edge)

Kinergy Advancement: Acquires Indonesian firm for RM8.89m to build biogas plant in Aceh. Energy services firm Kinergy Advancement is acquiring an Indonesian company for RM8.89m to build a 4.26-megawatt biogas plant in Aceh. KAB’s unit KAB Energy Holdings SB signed a term sheet with Green Energy Specialist Pte Ltd of Singapore to acquire the entire equity interest in PT Green Energy Specialist One Tbk (PT Geso). The proposed acquisition includes exclusivity over a 6.5-hectare land where the plant will be built. (The Edge)

Nestcon: Bags RM37.7m construction job in Selangor. Nestcon has secured a RM37.7m contract for construction works on a development project in Kota Seri Langat in Banting, Selangor. The construction outfit stated that its wholly-owned subsidiary, Nestcon Infra SB, has accepted a letter of award (LOA) from property developer Seriemas Development SB to undertake the construction and completion of earthworks, soil improvement, and associated works for package 4-2 of the proposed development. (The Edge)

Jati Tinggi: JV secures TNB contract valued at RM25.55m. Jati Tinggi Group's wholly-owned subsidiary Jati Tinggi Holding SB and its joint venture partner, Worktime Engineering SB, has won a tender for works on a proposed 132KV bulk supply to a semiconductor production factory in Kuala Lumpur. In a filing with Bursa Malaysia, the group said the contract from Tenaga Nasional is valued at RM25.55m. It entails laying 132kV underground cable double circuit for the said factory. (StarBiz)

Sime Darby Property: Announces internal reorganisation plan. Sime Darby Property has proposed an internal reorganisation to streamline its structure into separate identifiable business streams to better reflect the group's diverse operations. As per the proposal, Sime Darby will transfer all its assets, liabilities and business undertakings to its wholly-owned subsidiaries and operate purely as an investment holding company. At present, Sime Darby Property is principally involved in property development, management services and acting as the listed investment holding company of the group. (StarBiz)

MARKET UPDATE

The FBM KLCI might open flat today after US stocks held steady Thursday as Wall Street’s momentum cooled following its latest record-setting day. The S&P 500 barely budged a day after leaping to set an all-time high for the 25th time this year. It dipped by 1.07, or less than 0.1%, to 5,352.96. The Dow Jones Industrial Average added 78.84, points, or 0.2%, to 38,886.17, while the Nasdaq composite slipped 14.78, or 0.1%, to 17,173.12 after hitting its own record. Many retailers and other companies have been highlighting a split between their customers making lower and higher incomes. Inflation is particularly hurting those at the lower end, who are struggling to keep up with a cost of living that’s still rising, even if inflation is not as fast as before. That threatens to crack a linchpin that’s kept the US economy out of a recession despite high interest rates: strong spending by US households. Stock indices rose modestly in Europe following the widely expected decision. They were mixed in Asia, with indexes up 0.6% in Tokyo, down 0.5% in Shanghai and closed for trading because of a holiday in Seoul.

Back home, Bursa Malaysia closed higher on bargain hunting for stocks currently priced lower than usual after yesterday’s profittaking. At the closing bell, the FBM KLCI gained 6.20 points, or 0.39%, to 1,614.73 from yesterday’s close of 1,608.53.

Source: PublicInvest Research - 7 Jun 2024