HEADLINES

Economy

US: Weekly jobless claims decline more than expected. The number of Americans filing new applications for unemployment benefits fell more than expected last week, pointing to low layoffs though job opportunities are becoming scarce for those who are out of work. Initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 207,000 for the week ended 25 Jan, the Labor Department said. Economists polled by Reuters had forecast 220,000 claims for the latest week. While claims remain at levels consistent with a labour market that continues to plod along, consumers are becoming less optimistic about their prospects of finding employment in the event of a layoff. (Reuters)

US: Economy resilient despite moderation in growth in 4Q. US economic growth slowed in the 4Q as a strike at Boeing depressed business investment in equipment, but consumer spending increased at its fastest pace in nearly two years, underscoring strong domestic demand that probably keeps the Fed on a slow interest rate cut path this year. The moderation in growth last quarter reported by the Commerce Department was also because businesses struggled to keep up with the surge in demand, partly driven by households pre-emptively buying goods ahead of tariffs on imports that have been promised by President Donald Trump. The economy last year defied recession fears that had been fanned by the US central bank hiking rates by 5.25ppt in 2022 and 2023 to quell inflation. (Reuters)

US: Fed leaves interest rates unchanged after three straight cuts. After cutting interest rates for three straight meetings, the Fed announced its widely expected decision to leave interest rates unchanged following its first monetary policy meeting of 2025. The Fed said it decided to maintain the target range for the federal funds rate at 4.25% to 4.50% in support of its dual goals of maximum employment and inflation at the rate of 2% over the longer run. The decision to leave rates unchanged came as the Fed noted inflation remains "somewhat elevated" and reiterated its strong commitment to returning inflation to its 2% objective. Notably, the Fed removed a phrase included in previous statements indicating that inflation has "made progress" towards it target. The central bank also reiterated that it is attentive to the risks to both sides of its dual mandate, which it described as "roughly in balance." (RTT)

EU: Italy's economy stagnates, casting shadow over outlook. The Italian economy stagnated in the 4Q of last year from the previous three months, preliminary data showed, missing a forecast for marginal growth and casting a shadow over prospects for this year. The flat GDP reading marked the second straight quarter of zero growth in the euro zone's third largest economy. In a blow to Prime Minister Giorgia Meloni's government, activity has petered out despite the arrival in Rome's coffers of regular instalments of billions of euros of post-COVID 19 recovery funds from the European Commission. On a YoY basis, Italy's 4Q GDP was up 0.5%, national statistics bureau ISTAT said. (Reuters)

EU: ECB lowers interest rates for fourth session. The ECB cut its interest rates for a fourth policy session in a row as expected as euro area economy ground to a half in the final quarter of 2024 and inflationary pressures increased. The Governing Council, led by ECB President Christine Lagarde, lowered the benchmark, the deposit rate by 25bps to 2.75%. The main refinancing rate was trimmed by a similar volume to 2.90% and the lending rate to 3.15%, respectively. The central bank for the single currency bloc has lowered interest rates in every rate-setting session since Sept and each reduction was 25bps. (RTT)

UK: BoE readies rate cut and could hint at more to come. The BoE looks likely to cut interest rates next week, when it could also nudge investors to expect faster reductions than they currently predict as the economy flatlines. Economists polled by Reuters unanimously expect the BoE to cut its benchmark rate to 4.5%, from 4.75%, on 6 Feb, when it will also update its economic growth and inflation forecasts. Investors see a nearly 90% chance of a cut next week. (Reuters)

India: Economy faces slowing growth, volatile trade ahead of new financial year. Indian Prime Minister Narendra Modi may seek to arrest slowing economic growth in the world's fifth-largest economy and prepare for an uncertain year of global trade when his government presents the federal budget on 1 Feb. Economists expect policy changes aimed at strengthening consumption and tariff cuts to encourage local manufacturing as ways to boost growth. A weaker manufacturing sector and slower corporate investments are seen dragging India's growth to 6.4% in 2024/25, the slowest pace in four years. (Reuters)

Japan: Consumer confidence weakens to 21-month low. Japan's consumer sentiment decreased unexpectedly in Jan to the lowest level in nearly two years, survey data from the Cabinet Office showed. The seasonally adjusted consumer confidence index weakened to 35.2 in Jan from 36.2 in Dec. Meanwhile, economists had forecast the index to rise to 36.6. Further, the latest reading was the lowest since April 2023, when it was also the same 35.2. (RTT)

Singapore: Producer prices rise 2.3%. Singapore's producer prices increased for the first time in five months in Dec, driven by the growth in non-oil index, data from the Department of Statistics showed. The manufacturing PPI climbed 2.3 percent YoY in Dec, reversing a 4.0% decline in Nov. The non-oil index rose 4.5% annually in Dec, while the oil index declined sharply by 9.6%. The increase in the non-oil index was due to the machinery and transport equipment index, mainly reflecting higher prices of electrical machinery apparatus, as well as increases in the food and live animals, crude materials, animal and, vegetable oils indices. (RTT)

Markets

Datasonic: Bags new extension to passport chips supply contract with additional RM104.78m contract value. Datasonic Group Bhd's wholly owned subsidiary, Datasonic Technologies SB (DTSB), has received a 12-month extension from the Home Ministry to supply Malaysian passport chips to the Immigration Department. The company said the extension was from 1 Dec 2024, to 30 Nov 2025, with an additional contract value of RM104.78m. Datasonic said this would be the fifth extension of the passport chip supply contract, which was originally awarded on 15 Dec 2015. (Bernama)

Hextar Capital: Positive about expansion drive. Hextar Capital Bhd (HCB) is optimistic that its expansion into the construction business will reap benefits in the near future. Chairman Datuk Mazlin Md Junid said: "While our expansion into the construction sector is still early, it has already made a positive contribution to the group's revenue in the financial year ended 30 Sept, 2024 (FY24). (The Star)

Eonmetall: Plans private placement to raise RM22m for debt repayment, working capital. Eonmetall Group has proposed a private placement of up to 30% of its share base to raise RM22.1m. The placement of up to 91.41m shares to third-party independent investors, based on the group's current share base of 304.69m, is expected to be completed by the first quarter of 2025. The proceeds of RM22.1m is based on an indicative price of 26.5 sen per share, and will be used to repay borrowings and for working capital needs, including the purchase of raw materials, the group said. At the end of Dec 2024, Econmetall's total borrowings amounted to RM129.68m. The group intends to utilise RM11.7m raised from the exercise to repay its revolving credits. (The Edge)

Revenue Group: To adopt cautious stance. Revenue Group expects the current financial year ending 30 Sept, 2025 (FY25) to present a mix of challenges. Nevertheless, chairman Kamari Zaman Juhari remains cautiously optimistic over the company's outlook. "The growth in the digital economy and the ongoing digital advancement is expected to set up a steady growth for our economy in 2025. "The board will exercise caution and will continue to manage and guide the businesses of our group with vigilance, taking into account the potential impact from all the global factors that will bring to the business environment," he said in the company's annual report. (The Star)

TH Plantations: Sued for RM230m in native land dispute. TH Plantations said its 60%-owned unit TH Pelita Simunjan SB is being sued for RM230.3m for allegedly trespassing on native land. Nine individuals are suing TH Pelita Simunjan on behalf of themselves and other owners of native customary rights (NCR) land in Simunjan, Sarawak, said TH Plantation. The area involved in the suit spans 1,321.6ha out of TH Pelita Simunjan's total 9,629.6ha. (The Edge)

Ecobuilt: Plans capital reduction and rights issue. Ecobuilt Holdings has proposed a share capital reduction to wipe out its accumulated losses, as well as a rights issue to raise fresh capital. The capital reduction exercise will involve reducing RM35m of its RM67.96m share capital.The move is expected to eliminate the company's RM29.5m accumulated losses at end-August 2024, leaving it with pro forma retained earnings of RM5m. (The Edge)

MARKET UPDATE

US markets ended a volatile session higher as investors digested a slew of key earnings reports, with upbeat comments from Tesla helping to offset a disappointingforecast from Microsoft. The Dow Jones Industrial Average rose 0.3%, the S&P 500 gained 0.5%, and the Nasdaq Composite advanced 0.2%. European markets were trading around record highs, led by real estate and technology stocks, after the ECB cut interest ratesby a quarter point as expected. The German DAX rose 0.4%, the French CAC 40 gained 0.8%, and the FTSE 100 advanced 1.0%. Meanwhile, Asian markets climbed, diverging from Wall Street, which fell overnight after the Federal Reserve kept interest rates unchanged.Tokyo's Nikkei 225 rose 0.2%, while several Asia-Pacific markets, including those in China and Hong Kong, remained closed for the Lunar New Year holiday.

Source: PublicInvest Research - 31 Jan 2025