HEADLINES

Economy

US: Weekly jobless claims increase; labour market conditions still healthy. The number of Americans filing new applications for unemployment benefits increased more than expected last week, but remained at levels consistent with a healthy labour market. Initial claims for state unemployment benefits rose 14,000 to a seasonally adjusted 217,000 for the week ended Jan 11, the Labor Department said. Economists polled by Reuters had forecast 210,000 claims for the latest week. Claims data tend to be volatile at the start of the year, but have continued to signal low layoffs that are underpinning the labor market and broader economy. Non-farm payrolls increased by 256,000 jobs in December while the unemployment rate dropped to 4.1% from 4.2% in Nov. (Reuters)

US: Retail sales rise solidly in Dec. US retail sales increased solidly in December, pointing to strong demand in the economy and further reinforcing the Federal Reserve's cautious approach to cutting interest rates this year. Retail sales rose 0.4% last month after an upwardly revised 0.8% gain in Nov, the Commerce Department's Census Bureau said. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, advancing 0.6% after a previously reported 0.7% rise in Oct. The report followed news last week of a surge in non-farm payrolls and drop in the unemployment rate to 4.1% from 4.2% in Nov. Though underlying inflation slowed in Dec, overall consumer prices increased by the most in nine months. (Reuters)

US: Mortgage rates top 7%, reach highest since May last year. US mortgage rates topped 7% last week, reaching the highest level since early May and extending a months-long advance that risks restraining the housing market. The contract rate on a 30-year mortgage rose 10 basis points to 7.09% in the week ended Jan 10, according to Mortgage Bankers Association (MBA) data. Since late Sept, home financing costs have increased nearly a full percentage point. Mortgage rates track US treasuries, and the 10-year yield on Tuesday advanced to the highest level since October 2023. Borrowing costs have soared since mid-December amid a resilient economy, the prospect of fewer interest-rate cuts by the Federal Reserve and concerns that Trump's policies will keep inflation elevated. (Bloomberg)

UK: Disappoints with GDP growth of 0.1% in first month after Reeves' budget. Britain's economy narrowly returned to growth in Nov but fell short of expectations as the UK struggles to shake off concerns that the country is in the grip of stagflation. GDP increased 0.1% following a 0.1% contraction in both Sept and Oct, the Office for National Statistics (ONS) said. That was below forecasts for 0.2% growth. It means the economy is still smaller than it was in June, the month before Labour came to power. The figures will reinforce fears that the UK is stuck in a stagflationary trap of rising prices and flat-lining growth, despite a welcome slowdown in inflation in December. The economy has now grown just twice in the five months since Labour took office. The pound fell following the data and was trading at US$1.2214, down 0.2% on the day. (Bloomberg)

China: Cash squeeze rolls on even after central bank's infusions. China's cash squeeze extended with some signs of disruption to trading, as a liquidity infusion from Beijing failed to counteract a spike in demand for funds. The People's Bank of China injected another 336.4 billion yuan (US$45.9 billion or RM206.6 billion) of short-term funds into the banking system, following its second largest ever cash infusion in the previous session. That was aimed at offsetting the impact of the expiration of medium-term lending, peak tax season and cash demand before Lunar New Year holidays, and to keep liquidity ample, it said in a statement. (Bloomberg)

Japan: Wholesale inflation steady near 4%, BOJ eyes rate hike next week. Japan's annual wholesale inflation held steady at 3.8% in December on stubbornly high food costs, data showed, highlighting persistent price pressures that may prod the central bank to raise interest rates next week. The data comes in the wake of Bank of Japan governor Kazuo Ueda's remarks that the bank will debate whether to raise rates at the Jan 23-24 meeting, signalling it will take borrowing costs higher barring any market shocks after US President-elect Donald Trump takes office. "At next week's meeting, the board will debate whether to raise interest rates based on our new quarterly outlook report," Ueda said in a meeting with regional bank executives on Thursday, echoing comments made the previous day. (Reuters)

Korea: Bank of Korea unexpectedly holds rate steady as political turmoil, won weigh. South Korea's central bank unexpectedly left its policy interest rate unchanged, and signalled that it needs to wait for the domestic political turmoil weighing on the currency to stabilise before it can make further rate cuts. Bank of Korea (BOK) governor Rhee Chang-yong said the rate decision reflected a need to support the won, "which in part has been weakening due to political reasons" as it hit a 15-year low versus the dollar in recent weeks. "We will be able to make a more independent decision from US monetary policies to cut policy rates once (domestic) political conflicts stabilise somewhat," Rhee said at a news conference after the policy review and decision to keep its benchmark interest rate unchanged at 3.00%. (Reuters)

Markets

Alliance Bank (Neutral, TP: RM4.90): Top shareholder Vertical Theme, mulling sale to DBS. Investment management firm Vertical Theme SB is planning to seek approval in the coming weeks to start talks about selling its stake in Alliance Bank Malaysia, according to people familiar with the development. Vertical Theme, a Malaysian holding company, is considering selling its roughly 29% stake in Alliance Bank to Singapore's biggest lender, DBS Group Holdings Ltd, the people said, asking not to be identified because the deliberations are private. (The Edge)

Hextar Industries: To soft open 5 Luckin Coffee outlets this month. Hextar Industries, through its subsidiary Global Aroma SB (GASB), is set to launch a soft opening for five Luckin Coffee outlets by the end of this month. Hextar said the Chinese coffee house chain will open its first two outlets on Jan 23, at Sunway Pyramid and Menara EcoWorld, Bukit Bintang City Centre. The Luckin Coffee app will also be introduced on January 23. (StarBiz)

Jati Tinggi: Secures RM25.5m cable work from TNB. Jati Tinggi Holding announced that it had received a letter of acceptance issued by TNB for a tender submitted to perform contract works for the proposed 275kV bulk supply to a data center in Selangor. The contract sum for the Works shall be RM25.5m with the nature and scope of the contract being to lay 275kV underground cables double circuit for a data centre in Selangor. The contract period is effective from 15 Jan 2025 and to be completed within 270 days from the commencement date of the contract which will be determined later. (Business Today)

Sarawak Oil Palms: Eyes RM1.5m revenue with AvantHealth product's debut in China. Sarawak Oil Palms is targeting a revenue of RMB2.4m (RM1.5m) as its flagship product, AvantHealth Avtriee Tocotrienols, makes its debut in the Chinese market. Sarawak Oil Palms chief operating officer Eric Kiu Kwong Seng said the premium tocotrienol product produced by the company's unit, Avanstar International SB, has successfully penetrated most of China's e-commerce platforms beginning this month. (The Edge)

Sedania: Hires former Adidas, Warner Music MD to lead FMCG business. Sedania Innovator, which provides sustainable energy solutions as well as premium personal care and food supplements under the Tanamera brand, has hired Darren Choy to lead its FMCG business. Choy, who was formerly the managing director of Warner Music Malaysia and Singapore, as well as Adidas Malaysia and Singapore, will succeed Ng Hock Guan, who has stepped down as Sedania's FMCG Group chief executive officer due to personal commitments. (The Edge)

Silver Ridge: Settles dispute with subcontractor over outstanding contract payment. Silver Ridge Holdings said that a legal dispute between the telecommunication system solutions provider and a subcontractor over an outstanding contract payment has been resolved through mediation. The settlement was part of a consent judgment recorded at the High Court, the company said in a bourse filing. The subcontractor, Wilstech SB, had previously claimed that both parties had agreed that the final outstanding sum relating to five contracts for the provision of equipment to install telecommunication facilities stood at RM1.36m (comprising debt of RM1.01m plus interest. (The Edge)

MARKET UPDATE

US markets drifted lower following a mixed set of earnings reports from Morgan Stanley, UnitedHealth Group and other big companies. The Dow Jones Industrial Average fell 0.1%, the S&P 500 lost 0.2%, and the Nasdaq Composite declined 0.8%. US retail sales increased solidly in December, pointing to strong demand in the economy and further reinforcing the Federal Reserve's cautious approach to cutting interest rates this year. European markets closed higher, with luxury stocks soaring on strong results from Cartier owner Richemont and being lifted by cooling inflation, which could keep major central banks on track for further interest rate cuts. The German DAX rose 0.3%, the French CAC 40 advanced 2.1%, and the FTSE 100 gained 1.0%. Asian markets mostly climbed after US markets soared on the back of an unexpected decline in core inflation numbers for Dec and strong bank earnings. Tokyo's Nikkei 225 edged up 0.3%, the Hang Seng Index advanced 1.2%, and the Shanghai Composite gained 0.2%.

Source: PublicInvest Research - 17 Jan 2025