AtOneGoFinancial Blog: November 2022

Wednesday, November 30, 2022

Bursa Malaysia opens easier, mixed sentiments on Wall Street

KUALA LUMPUR: Bursa Malaysia extended yesterday’s losses to open easier on Wednesday, while sentiments were mixed on the Wall Street overnight.

At 9.05 am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) fell by 3.88 points to 1,473.08 from yesterday’s closing of 1,476.96.

The market bellwether opened 0.74 of-a-point lower at 1,476.22.

There were 145 gainers and 152 losers on the broader market, while 254 counters were unchanged, 1,739 untraded and 67 others suspended.

Turnover stood at 353.69 million units worth RM75.44 million.

In a research note today, Malacca Securities Sdn Bhd said the FBM KLCI is taking a mild breather amid profit-taking activities in selected glove heavyweights, following the conclusion of the 15th general election.

Additionally, with the Wall Street ending mixed yesterday ahead of the United States Federal Reserve chair Jerome Powell’s speech on the inflation battle into 2023, the uncertain sentiment may spill over towards the local front, it said.

“Nevertheless, traders could focus on the ongoing reporting season to uncover undervalued gems,“ it said.

Meanwhile, the market is still waiting for the formation of the Malaysian Cabinet, which may provide clues for Malaysia’s growth going forward, the stockbroking firm said.

“Given the uncertain setup, we expect investors to focus on defensive sectors such as the telco, utility as well as consumer sectors.

“We opine that the focus may shift to construction and building material stocks ahead of the re-tabling of Budget 2023, and the oil and gas sector could do well under the firm Brent crude oil prices environment,“ it added.

Among the heavyweights, both Maybank and CIMB were three sen lower at RM8.67 and RM5.79, respectively, Public Bank erased one sen to RM4.40, Petronas Chemicals went down eight sen to RM8.44 and IHH Healthcare decreased four sen to RM5.91.

Of the actives, MMAG and Zen Tech were flat at three sen and 4.5 sen, respectively, Leform eased three sen to 20 sen and SMTrack inched down half-a-sen to 5.5 sen, while MQ Technology gained half-a-sen to 5.5 sen.

On the index board, the FBM Emas Index weakened 15.79 points to 10,528.72, the FBMT 100 Index contracted 16.21 points to 10,243.70 and the FBM Emas Shariah Index slipped 11.89 points to 10,650.68.

Meanwhile, the FBM ACE strengthened 27.61 points to 5,224.33 and the FBM 70 went up 22.90 points to 12,719.27

Sector-wise, the Financial Services Index was 53.65 points lower at 16,595.40, the Industrial Products and Services Index inched down 0.33 of-a-point to 181.25 and the Energy Index trimmed 7.06 points to 756.85, while the Plantation Index ticked up 8.54 points to 6,815.77. - Bernama

Source: The Sun Daily

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US retailers cheer strong holiday sales start but fear rail strike

NEW YORK: US retailers cheered a buoyant start to the holiday shopping season on Tuesday (Nov 29), but warned that a potential freight rail strike could still cripple the critically busy period.

In spite of grinding inflation, customer counts on “Black Friday” and throughout the Thanksgiving holiday shopping weekend jumped from last year, exceeding expectations, according to data from the National Retail Federation (NRF).

Surveys had suggested shopper reticence, but “there’s a difference between attitude and action”, said NRF President Matthew Shay.

Consumers “say one thing and do another”, added Shay, who characterized the robust labor market as an offset to the drag from higher costs for gasoline and household staples.

The NRF’s survey estimated that 196.7 million Americans shopped in stores in the five-day stretch between last Thursday’s Thanksgiving and “Cyber Monday”, spending an average of US$325.44 on holiday-related purchases.

The number of shoppers accounts for almost 60% of the US population and stands 17% above the 2021 level, with most of the increase coming from a resurgence in physical shopping after ecommerce saw heady growth the last two pandemic-affected seasons.

The NRF has projected that holiday retail sales will grow between 6% and 8% over 2021 to as much as US$960.4 billion for the entire season.

“We continue to expect a healthy holiday season,” Shay said. “Consumers are spending and generally speaking, retailers are feeling positive about their inventory levels.”

But he emphasised that a rail strike would have “devastating” effects on the consumer-driven US economy, employing the same word US President Joe Biden used on Monday night in calling on Congress to intervene in the matter.

The issue has come to a head after workers at four of 12 freight rail unions rejected a September agreement between the rail industry and organised labour, setting the stage for a potential strike on Dec 9.

The proposed contract, reached after lengthy negotiations involving the White House, includes hefty wage increases but no paid sick leave.

Shay endorsed Biden’s message, noting that a rail strike would stress the nation’s transport system at a time when it is still recovering from supply chain problems.

But beyond the direct impact on commerce, Shay said a rail strike also had potential to dent consumer sentiment in a way similar to government shutdowns and other “external” events that have crimped prior holiday seasons.

A strike could hit consumer sentiment “at the worst possible time”, he said. – AFP

US consumer confidence in November falls to 4-month low

WASHINGTON: US consumer confidence slipped to a four-month low in November, with households less keen to spend on big-ticket items over the next six months amid high inflation and rising borrowing costs, heightening the risks of a recession next year.

But the survey from the Conference Board on Tuesday (Nov 29) also showed that consumers remained upbeat about the labour market, which could limit some of the anticipated economic downturn. The labour market has remained resilient despite the Federal Reserve's stiff interest rate increases, helping to keep consumer spending and the overall economy afloat.

“The weakening trend in confidence foreshadows a recession which will likely happen in the coming year,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina. “However, any potential recession could be short and shallow given the tight labour market and the hint that layoffs may not be as bad as feared.”

The Conference Board’s consumer confidence index fell to 100.2, the lowest reading since July, from 102.2 in October. Economists polled by Reuters had forecast the index to come in at 100.0. Still, the index remains above its Covid-19 pandemic lows. It places more emphasis on the labour market, which remains tight.

The decline in confidence was concentrated in the 55-and-over age group as well as among households with annual incomes below US$50,000. Lower-income households have borne the brunt of inflation that, before October, was marked by annual consumer prices increasing at rates not seen since the early 1980s.

There were notable decreases in confidence in Pennsylvania, Ohio and Michigan, which offset increases in Texas, New York, Florida and Illinois.

Consumers' 12-month inflation expectations increased to a four-month high of 7.2% from 6.9% in October, which the survey blamed on rising gasoline and food prices.

The Fed has raised its policy rate by 375 basis points this year from near zero to a 3.75%-4.00% range in what has become the fastest rate-hiking cycle since the 1980s.

The survey's so-called labour market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, rose to 32.8 from 31.8 in October. This measure correlates to the unemployment rate from the Labor Department.

Though it has dropped from 44.7 last November, it remains quite high by historical standards. This month's increase was despite a surge in job cuts in the technology sector as well as interest-rate sensitive finance and housing industries.

“The Fed’s strategy of attempting to reduce the availability of job openings relative to the supply of labour to put downward pressure on inflation does not appear to have made any progress in November based on this survey of households,” said Conrad DeQuadros, senior economic advisor at Brean Capital here.

With inflation continuing to dominate consumers’ concerns, fewer of them were interested in making big-ticket purchases over the next six months, the survey showed. The decline in buying intentions occurred across the board, flagging a slowdown in demand for goods and also bolstering expectations that recent signs of goods disinflation could become entrenched.

That also fits in with views that the economy could experience a sharp slowdown in growth or a mild recession in the first half of 2023.

The government is expected to confirm today that the economy rebounded strongly in the third quarter after gross domestic product contracted in the first half of the year.

Fewer consumers also planned to purchase a house over the next six months, according to the survey. Rising mortgage rates and high prices have significantly reduced affordability for many prospective buyers. Though house prices have came off the record highs reached during the Covid-19 pandemic-driven housing market boom, they remain significantly high.

A separate report on Tuesday showed the S&P CoreLogic Case-Shiller national home price index increased 10.6% year on year in September. That was the smallest gain since December 2020 and followed a 12.9% rise from August.

On a monthly basis, prices fell for a third straight month. Tight supply will, however, likely keep a floor under house prices.

“While buyers are stepping aside waiting for more affordable prices and rates, causing the slowdown on price growth, would-be sellers are sticking to their ground and holding tight to the inventory they currently own,” said Nicole Bachaud, senior economist at Zillow in Seattle.

“As a result, prices might not continue to plunge down as much as some projections anticipate, as the available inventory of homes on the market is constrained,” Bachaud said.

A third report from the Federal Housing Finance Agency showed that house prices increased 11.0% in the 12 months through September, the smallest rise since October 2020, after advancing 12.0% in August. – Reuters

HSBC eyes bumper dividend from US$10b sale of Canada unit to RBC

LONDON/TORONTO/NEW YORK: HSBC has agreed to sell its business in Canada to Royal Bank of Canada for C$13.5 billion (RM45.36 billion) in cash, paving the way for a potential bumper payout for shareholders later down the line.

The deal will help RBC consolidate its leading position in one of the world’s most concentrated banking markets, where the top six lenders control about 80% of banking assets. RBC's purchase price reflects a 30% premium to the value some analysts had attributed to HSBC's Canada business. Canadian regulators said they will review the deal.

HSBC, which once billed itself as the world’s local bank and built a global network of retail banking businesses, has in recent years been cutting those back to try to improve profits.

HSBC’s exit from Canada marks the first major banking deal in Canada since ING sold its local operations to Bank of Nova Scotia for C$3.1 billion in 2012.

HSBC’s disposals have accelerated amid pressure from its biggest shareholder Ping An Insurance Group, which has urged the bank to split off its Asian business to boost returns.

“We decided to sell following a thorough review of the business, which assessed its relative market position within the Canadian market and its strategic fit within the HSBC portfolio,” chief executive Noel Quinn said.

HSBC said it may return some of the proceeds of the sale, expected to net the bank a US$5.7 billion (RM5.7 billion) pre-tax gain, to shareholders via a one-off dividend or buyback from early 2024 onwards, after the deal has closed.

HSBC’s shares closed up 4.4%, against a benchmark FTSE 100 index up 0.5%.

RBC, which expects the deal to add 6% to its 2024 earnings per share, will fund the acquisition using internal resources. Its core capital ratio will drop to 11.5% upon close closure from 13.1% currently.

The deal will boost RBC’s assets by C$134 billion to C$2 trillion, and add about 130 branches to its existing network of 1,200 branches.

Joe Dickerson, an analyst at Jefferies in London, said a big payout could go some way towards appeasing shareholders who were incensed by HSBC curtailing dividends in 2020, at the suggestion of British regulators.

“The transaction looks very sensible. In essence, the business is worth more to RBC than it is to HSBC, and the price reflects this,” said Ian Gordon, banking analyst at Investec.

The deal also repairs what was an uncharacteristically weak capital position relative to HSBC's peers, Gordon said.

The purchase will enable RBC to take more market share in its home market, adding 130 branches and more than 780,000 retail and commercial customers. If successful, it will be the first big banking merger in a decade in Canada.

Carl De Souza, head of Canadian Banking at DBRS Morningstar, told Reuters the big question about the deal was “how the regulatory approval works out from a competition perspective”.

“As part of the regulatory approval, they might have to divest in some businesses,” he added.

RBC CEO Dave McKay told reporters the bank does not expect competition concerns, when asked if it would be open to divesting assets.

“We not aware of any areas where the bureau is likely to have concerns,” he said.

RBC and HSBC's combined assets would account for 25% of total Canadian banking assets, according to Morningstar.

HSBC is Canada's seventh-biggest bank with assets of C$125 billion, and it earned C$490 million before tax as of June 30, based on its latest financial results. Analysts had valued HSBC's Canada business in the range of C$8 billion to C$10 billion. – Reuters

US stocks mostly retreat ahead of Fed chief’s remarks

NEW YORK: Wall Street stocks closed mostly lower on Tuesday (Nov 29) as markets anticipated an appearance from Federal Reserve (Fed) chair Jerome Powell that could offer clues on the direction of monetary policy.

Powell’s address today (Nov 30) at the Brookings Institution comes as markets expect the central bank to soon moderate its policy of aggressive interest rate increases to counter inflation.

Investors were “hesitant” on Tuesday as they waited to see if Powell would indeed confirm such a shift, said LBBW’s Karl Haeling.

“Markets have a chance to trade higher (today) as long as he doesn’t deliver any surprise,” Haeling said.

The Dow Jones Industrial Average veered into negative territory much of the day before ending essentially flat at 33,852.53.

The broad-based S&P 500 slipped 0.2% to 3,957.63, while the tech-rich Nasdaq Composite Index shed 0.6% to 10,983.78.

The S&P 500 is headed for its second straight month of gains in November amid bets that recent inflation readings showing a slight cooling in prices will lead the Fed to scale back the scale of its interest rate increases.

Consumer confidence in the United States slipped for a second straight month in November, likely due to a rise in gas prices, according to a survey released by the Conference Board.

Meanwhile, the National Retail Federation estimated that 196.7 million Americans shopped in stores and online in the five-day stretch between last Thursday’s Thanksgiving and “Cyber Monday,” a better-than-expected result that highlighted the resilience of US consumers despite soaring inflation.

But the group warned of a “devastating” hit if there is a freight rail strike, backing a call from President Joe Biden for Congress to intervene in the matter.

Congressional leaders from both major parties expressed support for employing a rarely-used legislative power to avert a strike.

Among individual companies, Apple's stock dropped 2.1%, down for a fourth straight session.

Shares of Amazon, Nvidia and Tesla each lost more than 1%. – AFP, Reuters

7 Companies Laying Off Thousands of Workers

Laid off worker — DC Studio / Shutterstock.com

The nation is bracing for recession. The Federal Reserve continues to steadily raise its federal funds rate in an attempt to kill inflation, and many experts fear an economic downturn will be an unfortunate side effect of that campaign. CEOs of major companies are especially worried that the economy will contract soon. A staggering 86% of chief executives polled in October forecast a recession in...

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How to Stop Living Paycheck to Paycheck in 8 Steps

Stressed man worried about bills and money — Trzykropy / Shutterstock.com

Are you stuck in the all-too-common habit of living paycheck to paycheck? You don’t need me to tell you that’s a self-defeating cycle. You simply can’t get ahead that way. But escaping isn’t easy, especially if your paycheck is tight. Change involves not just the hard work of making a new habit, but also changing your ways of thinking. And yet people do make this leap. They pay off huge debts...

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Monday, November 28, 2022

15 Shade Garden Ideas

Early retiree in her garden — SpeedKingz / Shutterstock.com

Editor's Note: This story originally appeared on LawnStarter. Shade gardens are among the best-kept secrets of the gardening world. Often seen as a plague on turfgrass and flowering plants, shade can boost your landscape’s curb appeal in more ways than one. We’ll show you how with these 15 shade garden ideas. Rather than chop down your trees to allow more light for your lawn grass, try this: Plant...

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Hyundai Motor, LGES consider building two JV battery plants in US - report

SEOUL: South Korea’s Hyundai Motor Co and LG Energy Solution Ltd (LGES) are considering building two joint venture battery plants in the United States, a local online news outlet reported on Nov 28.

Under the contemplated plan, the plants would be built in Georgia and each have an annual capacity of about 35 gigawatt hours (GWh), enough to power about one million electric vehicles (EVs), said the news service, Dailian, citing an unnamed source.

LGES declined to comment. Hyundai Motor was not immediately available for comment when contacted by Reuters.

The report added that the new factories were likely to be located near Hyundai Motor Group’s new EV plant in Georgia and would help the company meet US EV subsidy rules.

The US Inflation Reduction Act will require from next year that at least 40% of the monetary value of critical minerals for batteries be from the US or a US free-trade partner to qualify for US tax credits. That share will rise to 80% in 2027.

A South Korean newspaper on Nov 25 reported that Hyundai Motor and SK On, the battery unit of energy group SK Innovation Co Ltd, planned to invest about 2.5 trillion won (RM8.46 billion) to build a new joint venture factory in Georgia.

Last year, Hyundai Motor Group and LG Energy Solution said they would set up a US$1.1 billion (RM5 billion)EV battery joint venture in Indonesia. - Reuters

Evergrande aims to win approval for restructuring proposals early next year

HONG KONG: Embattled property developer China Evergrande Group aims to win creditors’ support for its debt restructuring proposals by as early as the end of February, the company’s lawyers said on Nov 28.

Once China’s top-selling developer, Evergrade is now at the centre of the country’s property sector crisis. Its $22.7 billion worth of offshore debt, including loans and private bonds, is deemed to be in default after missed payments late last year.

With few fresh funding options and slowing property sales, Evergrande, which has $300 billion in total liabilities, began one of China’s biggest debt-restructuring processes this year.

Evergrande expects to firm up debt restructuring proposals by end-February or early-March, lawyers for the developer told a Hong Kong court, which adjourned a winding-up lawsuit against the developer to March 20, 2023.

Reuters reported earlier this month that Evergrande would sign

non-disclosure pacts

with bondholders in November to prepare for negotiation in December, with terms to be finalised early next year, citing a source with knowledge of the matter.

An investor in online real estate and automobile marketplace Fangchebao (FCB), an Evergrande unit, filed the winding-up petition in Hong Kong in June because the developer had not honoured a pact to repurchase the shares the investor bought in FCB.

Evergrande and its major offshore credit group have opposed to the winding-up petition, saying the developer was actively pushing forward with the offshore debt restructuring work in the interest of all creditors. - Reuters

Oil falls over US$2 a barrel as China’s Covid protests fuel demand fears

TOKYO: Oil futures fell more than US$2 (RM9.05) a barrel on Nov 28, with WTI hitting an 11-month low, as protests in top importer China over strict Covid-19 curbs fuelled demand concerns.

Brent crude dropped US$2.16, or 2.6%, to trade at US$81.47 a barrel at 0230 GMT, after diving to US$81.16 earlier in the session -- its lowest since Jan 11.

US West Texas Intermediate (WTI) crude slid US$2.08, or 2.7%, to US$74.20 a barrel. It fell as far as US$73.82 earlier -- its lowest since Dec 27 last year.

Both benchmarks, which hit 10-month lows last week, have posted three consecutive weekly declines. Brent ended the latest week down 4.6%, while WTI fell 4.7%.

“On top of growing concerns about weaker fuel demand in China due to a surge in Covid-19 cases, political uncertainty, caused by rare protests over the government’s stringent Covid restrictions in Shanghai, prompted selling,“ said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

WTI’s trading range is expected to fall to US$70-US$75, he said, adding the market could stay volatile depending on the outcome of the Opec+ meeting and the price cap on Russian oil.

China, the world’s top oil importer, has stuck with President Xi Jinping’s zero-Covid policy even as much of the world has lifted most restrictions.

Hundreds of demonstrators and police clashed in Shanghai on Nov 27 night as protests over China’s strict Covid restrictions flared for a third day and spread to several cities in the wake of a deadly fire in the country’s far west.

The wave of civil disobedience is unprecedented in mainland China since Xi assumed power a decade ago, as frustration mounts over his zero-Covid policy nearly three years into the pandemic.

“Bearish sentiment is growing in the oil market with mounting concerns over demand in China and a lack of clear signs from oil producers to further cut output,“ said Tetsu Emori, CEO of Emori Fund Management Inc.

“Unless Opec+ agrees on a further reduction of production quota or the United States moves to reload its strategic petroleum reserves, oil prices may be headed further down,“ he said.

The Organization of the Petroleum Exporting Countries (Opec) and allies, known as Opec+, will meet on Dec 4.

In October, Opec+ agreed to reduce its output target by two million barrels per day through 2023.

The next Opec+ meeting will take into account the condition and balance of the market, Iraq’s state news agency quoted Saadoun Mohsen, a senior official at the country’s state oil marketer SOMO, as saying on Saturday.

Investors also focused on Western plans for a price cap on Russian oil.

Group of Seven(G7) and European Union diplomats have been discussing a price cap on Russian oil of between US$65 and US$70 a barrel, with the aim of limiting revenue to fund Moscow’s military offensive in Ukraine without disrupting global oil markets.

But a meeting of European Union government representatives, scheduled for Nov 25 evening to discuss the issue, was cancelled, EU diplomats said. On Nov 24, EU governments were split on the level at which to cap Russian oil prices.

The price cap is due to come into effect on Dec 5 when an EU ban on Russian crude kicks off. - Reuters

Penang the largest contributor to M’sia's exports in Oct

KUALA LUMPUR, Nov 28 (Bernama) -- Malaysian exports rose 15 per cent year on year to RM131.6 billion in October 2022, with Penang posting the highest exports at RM7.1 billion.

Malaysia's total trade in October jumped 21 per cent to RM245.2 billion.

In a statement, the Department of Statistics Malaysia (DOSM) said according to the export-import statistics by state for October released today, higher exports were also recorded in most states such as Johor (RM4.8 billion), Sarawak (RM3.7 billion), Labuan (RM1.7 billion), Sabah (RM1.4 billion), Kedah (RM1.0 billion), Negeri Sembilan (RM453.2 million), Perlis (RM43.5 million), Kuala Lumpur (RM41.8 million), Melaka (RM38.0 million) and Kelantan (RM17.7 million).

However, exports decreased in Selangor (RM1.8 billion), Terengganu (RM581.2 million), Perak (RM404.6 million), and Pahang (RM330.6 million).

Malaysia’s total trade for October amounted to RM245.2 billion, an increase of 21.1 per cent year-on-year, with exports of RM131.6 billion (15 per cent) and imports worth RM113.5 billion (29.2 per cent).

Chief statistician Mohd Uzir Mahidin said imports also increased by RM25.6 billion (29.2 per cent) in October on year.

“The increase in imports was due to the higher imports in most states such as Johor (RM14.1 billion), Selangor (RM4.3 billion), Melaka (RM1.9 billion), Kedah (RM1.8 billion), Pulau Pinang (RM1.7 billion), Sarawak (RM929.3 million), Negeri Sembilan (RM353.0 million), Kuala Lumpur (RM164.6 million), Pahang (RM144.6 million), Sabah (RM107.8 million), Kelantan (RM39.8 million) and Perlis (RM26.3 million).

However, imports decreased in Terengganu (RM346.0 million), Labuan (RM52.5 million), and Perak (RM32.5 million).

Mohd Uzir said among the top five major exporting states, Penang remained the top exporter with a share of 29.6 per cent, followed by Johor (21.9 per cent), Selangor (17.1 per cent), Sarawak (9.0 per cent) and W.P. Kuala Lumpur (4.3 per cent).

For imports, Johor was the largest contributor with a share of 28.0 per cent, followed by Selangor (24.0 per cent), Penang (20.8 per cent), Kedah (6.5 per cent) and Kuala Lumpur (5.7 per cent).-Bernama

Malaysia should engage with EU on new corporate sustainability reporting directive: MPOC

KUALA LUMPUR: Malaysia should engage with the European Union (EU) on the EU’s new Corporate Sustainability Reporting Directive (CSRD) and any future rules that will have a significant impact on a broad range of companies operating in the world’s largest trading bloc, the Malaysian Palm Oil Council (MPOC) said.

Companies should prepare to ensure compliance with the new reporting obligations, it added.

“Following the entry into force of the new CSRD, the new rules will only start applying in stages: In 2024 for companies already subject to the current reporting obligations, in 2025 for large companies currently not subject to the reporting obligations, and, in 2026, for small and medium enterprises (SMEs),” the council said in a statement.

The MPOC said companies covered by the CSRD would have to comply with the forthcoming European Sustainability Reporting Standards, which are still being developed by the European Financial Reporting Advisory Group.

It would require “covered” companies to report on corporate sustainability in a dedicated section of the company’s management report, which must be made publicly available.

The European Parliament and the Council of the EU this month are adopting this month the EU’s new CSRD, which would significantly enhance and expand sustainability reporting obligations for a broader range of companies.

The covered companies are required to include in their management reports a non-financial statement containing information on the policies they implement in relation to “environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters.”

The new CSRD will apply to all large EU companies, including EU subsidiaries of non-EU parent companies, and SMEs listed on regulated markets.

Importantly, the CSRD will also have an impact on non-EU undertakings with annual EU-generated revenues in excess of €150 million (RM705.26 million) and that have either a large or listed EU subsidiary or a significant EU branch generating a net turnover of more than €40 million in the EU.

Last year the European Commission published its proposal for the CSRD with the objective of revising and strengthening the rules of the EU’s current Non-Financial Reporting Directive (NFRD).

Currently, the NFRD provides rules on the disclosure of non-financial and diversity information that must be complied with by large companies listed in the NFRD, banks, and insurance companies with more than 500 employees. - Bernama

Saturday, November 26, 2022

10 Hidden Homeowner Costs — and How to Slash Them

Man tired of mowing lawn — BaLL LunLa / Shutterstock.com

Buying a home is often seen as a major milestone in finances and in life. However, even after you buy a home, you might be surprised to discover that it’s not as affordable as you thought. Here’s what you need to know about several common, but often overlooked, homeowner costs before buying property — and how to keep them from breaking the bank after you become a homeowner.

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Sunway Q3 profit jumps to RM164m as most of its business segments improve

KUALA LUMPUR: Sunway Bhd saw its net profit for the third quarter ended Sept 30, 2022 (Q3 2022) jumping 126 per cent to RM164.72 million from a year earlier, supported by stronger contributions from most business segments.

Revenue was 48.3 per cent higher at RM1.27 billion versus RM856.92 million previously, contributed by higher revenue recorded from all business segments.

“The property investment, construction, trading, manufacturing, and healthcare segments contributed substantially to the group’s improved performance.

“However, lower profit contributions were noted in the property development and other segments,” it said in a filing with Bursa Malaysia.

Sunway Group chief financial officer Chong Chang Choong said the group’s strong financial performance was due to the robust economic rebound post-pandemic and from the low base of negative economic growth in the previous year.

“The improving domestic economic outlook augurs well for the group.

“With the anticipation of normalisation of international travel, the group expects its leisure, hospitality, and healthcare segments to benefit from the improving inbound tourism sector,” he added.

Chong noted that the recent monetary tightening policy undertaken by the central bank might affect the sentiment of home purchasers, but the impact would be mitigated by the sustained economic recovery.

“Barring any unforeseen circumstances, the group is confident that its financial performance for the financial year 2022 (FY22) will remain satisfactory,” he added.

Sunway said pursuant to the Malaysian Financial Reporting Standard (MFRS) 15, the development profit from two of its ongoing property development projects in Singapore would only be recognised upon completion and handover of the projects, which is expected to be in FY23.

“The accumulated profit of these projects amounted to RM101.7 million, of which RM14.2 million was recorded in the current quarter but was not recognised,” it said. - Bernama

Global uncertainties, sluggish demand to weigh on rubber price next week

KUALA LUMPUR: The Malaysian rubber market is expected to trade range-bound and prices and demand to be muted with a very slight tendency to move up amid global uncertainties and volatility of the ringgit against the US dollar.

Malaysian Rubber Glove Manufacturers Association (MARGMA) immediate past president Denis Low said the rubber market continues to be sluggish despite the lower capacity output during this monsoon period.

He believes that it is mainly attributable to the recent COVID-19 scare in China where many big industrial cities are in total lockdown.

Rubber usage is always attuned to logistics and the movement of people.

“Whenever there is a serious lack of movement of people and logistics, it also means the slowdown of businesses and productivity which hampers the usage of rubber,” he told Bernama.

For the moment, he said the prices and demand are at least holding up due to the inclement weather, and hopefully replenishment and stocking-up activities will continue.

Another dealer said rubber prices will continue to track the performance of regional rubber futures markets, the strength of ringgit against the US dollar and benchmark crude oil prices amid weaker economic growth expected in 2023.

“Market operators are expected to monitor the upcoming global economic indicators on top of developments from the widening COVID-19 curbs in China for further cues,” he said.

On a Friday-to-Thursday basis, Standard Malaysian Rubber (SMR) 20 decreased 16 sen to 561 sen a kilogramme (kg) from 577 sen per kg while latex-in-bulk lost 9.0 sen to 462 sen a kg from 471 sen a kg a week earlier.

At 5 pm on Friday, MRB’s closing price for SMR 20 stood at 559 sen a kg and latex-in-bulk was at 460 sen a kg. - Bernama

Ringgit likely to revisit 4.46 level next week

KUALA LUMPUR: The ringgit is likely to revisit the 4.46 level next week, last seen in August as market mood continues to be lifted by renewed interest rate hopes and optimism about the new government.

SPI Asset Management managing director Stephen Innes said the 10th Prime Minister Datuk Seri Anwar Ibrahim intends to focus on stability and the economy, which will benefit the ringgit.

“The market views the Pakatan Harapan leader as market-friendly.

“Parliament will prioritise approving the budgets for the government’s short-term operating expenses and will aim to table Budget 2023 in a month or so after that,” he told Bernama.

Nevertheless, Innes said that during the week, the market will see a heavy calendar of Federal Reserve speakers, including speeches from New York Fed president John Williams and St Louis Fed president James Bullard on Nov 28.

Fed chair Jerome Powell will speak about the economy and the labour market on Nov 30.

The “second” estimate for the third quarter of the US gross domestic product (GDP), based on more complete data, will be released on the same day.

“They will remain hawkish, trumpeting the Fed’s inflation-fighting credentials. So this could hold back the ringgit early in the week, given how quickly we have come on the rally front.

“But since I think hawkish Fed speak is a low bar to hurdle given the downtrend in US inflation, the ringgit could trade even stronger towards the end of the week,” he noted.

The ringgit kicked off the week just ended on a weak tone as the first-ever hung parliament outcome in Malaysia from the 15th General Election (GE15) held last Saturday shook investors’ confidence.

The market made a turnaround and rallied as much as 1.8 per cent to its highest in over two months versus the US dollar on Thursday with the appointment of Anwar as the new Prime Minister, thus easing the political uncertainty.

The local currency was the best-performing currency in Asian on Thursday, also boosted by continued hope that price pressure has started to ease, with the Fed’s November meeting minutes pointing interest rate hikes may slow soon.

On a week-on-week basis, the ringgit jumped against the US dollar to 4.4795/4890 on Friday from 4.5490/5565 on Thursday the previous week.

The local note was also traded mostly higher against a basket of major currencies.

It appreciated against the Singapore dollar to 3.2573/2645 from 3.3091/3150 on Thursday last week, rose vis-a-vis the Japanese yen to 3.2118/2188 from 3.2581/2637 and strengthened against the euro to 4.6551/6650 from 4.7146/7224 previously.

The ringgit, however, was lower against the British pound to 5.4094/4209 from 5.4069/4159 the previous week. - Bernama

Friday, November 25, 2022

Malaysia’s inflation eases to 4.0% in Oct 2022: DOSM

KUALA LUMPUR: Malaysia’s inflation rate has eased to 4.0 per cent in October 2022 compared to the 4.5 per cent recorded in September 2022, said the Department of Statistics Malaysia (DOSM).

However, the rate still surpassed the nation’s average inflation for the period of January 2011-October 2022 of 2.0 per cent, DOSM said in a statement today.

Chief Statistician Malaysia Datuk Seri Dr Mohd Uzir Mahidin said the Consumer Price Index (CPI) for October 2022 increased by 4.0 per cent year-on-year to 128.6 from 123.7 in October 2021.

He said the inflation rate in Malaysia during the month was lower than the inflation in the Philippines (7.7 per cent), Thailand (6.0 per cent), Indonesia (5.7 per cent), and South Korea (5.7 per cent).

“The Eurozone’s inflation jumped to 10.7 per cent in October 2022 from 9.9 per cent in the previous month driven by energy inflation (41.9 per cent); food, alcohol and tobacco (13.1 per cent); non-energy industrial goods (6.0 per cent) and services (4.4 per cent),” he said.

The inflation rate in the United States eased to 7.7 per cent in October 2022 from 8.2 per cent in September 2022.

At home, the moderate increase in the October inflation rate was driven by the slower increase for the housing, water, electricity, gas and other fuels group to 1.5 per cent from 4.0 per cent in September 2022.

“This slower increase was due to the absence of base effects attributed to the discontinuation of electricity discounts under the National People’s Well-Being and Economic Recovery Package (Pemulih) from July to September 2021,” Mohd Uzir said.

The chief statistician said inflation for the food and non-alcoholic beverages group increased by 7.1 per cent versus the 6.8 per cent recorded in September 2022.

“There are food items that showed a slower growth momentum as compared to September 2022. Among the subgroups were vegetables, which increased to 4.8 per cent from 6.3 per cent, and oils and fats increased 2.6 per cent from 3.8 per cent in September 2022,” he said.

Mohd Uzir said apart from the food group, all other groups continued to record increases except for communication, which remained unchanged compared to the same month last year.

The restaurants and hotels group increased by 6.8 per cent, followed by transport (5.2 per cent); furnishings, household equipment and routine household maintenance (4.1 per cent); and recreation services and culture (3.4 per cent).

“In addition, miscellaneous goods and services grew 2.4 per cent; housing, water, electricity, gas and other fuels were up 1.5 per cent; and education was 1.4 per cent higher.

“Both health and alcoholic beverages and tobacco groups increased 1.0 per cent and 0.8 per cent, respectively, while clothing and footwear inclined marginally 0.4 per cent against October 2021,” he said.

Mohd Uzur said for the January to October 2022 period, inflation increased by 3.3 per cent as compared to the same period of the previous year, mainly attributed to food and non-alcoholic beverages (5.5 per cent), transport (4.6 per cent), and restaurants and hotels (4.6 per cent).

On a monthly basis, the inflation in October 2022 recorded 0.2 per cent as compared to 0.1 per cent in September 2022, contributed by the food and non-alcoholic beverages (0.5 per cent), while restaurants and hotels and miscellaneous goods and services groups increased by 0.3 per cent, respectively.

“A marginal increase in transport of 0.1 per cent also contributed to the increase,” he added.

At the state level, Mohd Uzir said three states showed an increase above the national inflation level of 4.0 per cent. The states are Wilayah Persekutuan Putrajaya (7.6 per cent), Selangor (4.9 per cent) and Sarawak (4.3 per cent).

Wilayah Persekutuan Labuan recorded the lowest increase of 2.3 per cent.

Mohd Uzir said all states registered an increase in the inflation of food and non-alcoholic beverages, with the highest increase recorded by Selangor (8.8 per cent) followed by Sarawak (7.8 per cent), Penang and Wilayah Persekutuan Putrajaya at 7.6 per cent, respectively, Johor (7.3 per cent) and Sabah (7.2 per cent).

“Other states showed an increase below the national inflation of food & non-alcoholic beverages rate of 7.1 per cent in October 2022.

“Inflation for the income group below RM3,000 increased 3.9 per cent from 124.3 in October 2021 to 129.1 in October 2022, driven by restaurants and hotels at 7.5 per cent, followed by the food and non-alcoholic beverages group at 6.8 per cent; furnishings, household equipment and routine household maintenance (4.4 per cent); recreation services and culture (3.4 per cent); transport (3.0 per cent) and miscellaneous goods and services (2.1 per cent),” he added.

— Bernama

Binance to commit US$1 billion for crypto recovery initiative

BENGALURU: Cryptocurrency exchange Binance said on Thursday (Nov 24) it was committing US$1 billion (RM4.49 billion) to establishing an industry recovery initiative to invest in companies from the digital assets sector.

The move comes at a time when the crypto market is teetering from the collapse of FTX, which is seeking Chapter 11 bankruptcy protection in the United States.

The unravelling of one of the biggest crypto exchanges in the world has also fanned worries around the industry’s continued ability to draw investments from venture capital and private equity giants.

Binance said it intends to ramp up its commitment amount to US$2 billion in the near future depending on need.

“We anticipate this initiative will last about six months and will be flexible on the investment structure – token, fiat, equity, convertible instruments, debt, credit lines, etc,” the crypto exchange added in a statement.

Zhao said while speaking at a conference in Abu Dhabi last week that there was significant interest from industry players in a recovery fund his company plans to launch to help cryptocurrency projects facing a liquidity squeeze, following the collapse of rival FTX.

He said such a fund would help “reduce further cascading negative effects of FTX” without giving an exact figure for the fund.

Several crypto firms have been bracing for the fallout from the FTX collapse, with many counting their exposure in millions to the beleaguered exchange. – Reuters

European Union fails to agree gas price cap amid deep divisions

BRUSSELS: European Union (EU) energy ministers failed on Thursday (Nov 24) to agree a cap on gas prices to mitigate the energy crunch in Europe, amid deep divisions over an initial proposal slammed by many as a “joke”.

The ministers will now meet in the first half of December to try to bridge differences, said Czech Industry Minister Jozef Sikela, whose country currently holds the rotating presidency of the EU.

During the “heated discussions” ministers did manage to adopt a couple of other “important measures”, including joint gas purchases to avoid intra-EU competition driving up prices, supply solidarity in times of need, and hastening authorisation of renewable energy sources, Sikela said.

Several ministers going into Thursday’s meeting complained that the gas price cap proposal on the table, unveiled by the European Commission just two days earlier, was clearly designed to never be used.

The Polish and Spanish energy ministers called the proposal a “joke”.

The price cap plan – which the commission was never keen on – sets a maximum threshold of €275 (RM1,286) per megawatt hour.

But it comes with so many conditions attached that it would not even have been activated back in August, when the gas price briefly soared above €300, alarming Europe used to historic prices around 10% of that.

The cap proposal would only be triggered if the €275 limit was breached continuously for at least two weeks, and then only if the price for liquified natural gas (LNG) rose above €58 for 10 days within that same two-week period.

The price of wholesale gas in Europe on Thursday was around €124, according to the main TTF benchmark.

The commission's proposed price cap was seen as neutered under pressure from members including Germany and the Netherlands, which feared a cap could divert gas supplies to more lucrative markets, especially Asia.

Yet at least 15 EU countries – more than half the bloc – want some form of workable ceiling on wholesale gas prices to tackle a crunch in supply forced by Russia’s war in Ukraine.

EU energy minister Kadri Simson said the European Commission was bound by “parameters” it was given by EU capitals in its formulation of a price cap, and that those governments were free to agree on a change to the parameters if they wished.

While the proposed cap “is not about one number”, she stressed the aim was to have a capping mechanism that, once activated, would stay in place for “a longer time period” and not turn on and off according to daily trading.

She also said that it was designed for next year’s gas filling season, when international competition for supplies could skyrocket.

“All signs are hinting that next year that global competition might be even significantly fiercer than it was this summer and autumn,” when European prices soared, she said.

While the EU hasn't banned Russian gas, the Kremlin has been turning off the taps in retaliation for sanctions imposed by Brussels in the wake of Moscow's invasion.

Before the war, Russian gas supplies accounted for more than 40% of all imported gas into the EU, with export powerhouse Germany particularly needy.

That has now dropped to less than 10%.

But alternative sources – such as LNG shipped from the United States and the Gulf – cannot make up the shortfall, and Europe faces a pricey heating bill for winter.

The price cap plan, if adopted, would start in January. It would run alongside a voluntary initiative for EU member states to cut natural gas use by 15% over the northern hemisphere winter. – AFP

Ringgit strengthens to 4.47 today

KUALA LUMPUR: The ringgit continued its positive momentum this morning, rising by 0.38% against the US dollar at the opening today, reflecting the positive sentiments following the clarity in Malaysia’s political tussle and the United States Federal Reserve’s signal of a downshift in rate hikes.

At 9am, the local note further strengthened to 4.4760/4810 against the greenback from yesterday’s close of 4.4910/5000.

SPI Asset Management managing director Stephen Innes said there was a huge follow-through on Malaysia’s stock market following the appointment of Datuk Seri Anwar Ibrahim as Malaysia’s 10th Prime Minister, which helped the ringgit to attract foreign investments.

The Pakatan Harapan chairman was sworn in as the prime minister at the Istana Negara yesterday.

“However, a big driver of sentiment going forward will be the softer interest rate hikes indicated by the Federal Open Market Committee’s minutes,” he told Bernama.

Nevertheless, he expects the market to be quiet with the US celebrating the Thanksgiving holiday this weekend.

Meanwhile, ActivTrades trader Dyogenes Rodrigues Diniz said the decline in the US dollar seems like a natural market correction after the prolonged greenback rally, which saw the US currency hitting multiple highs over the past two years.

“The US dollar registered a cumulative gain of almost 19% against the ringgit during that time.

“Most of the buyers who have benefited from that rise are now taking profit as they are wary of the market’s cyclical behaviour, which is now causing a retracement,” he said.

Meanwhile, the ringgit was traded higher against a basket of major currencies.

The local note climbed versus the Singapore dollar to 3.2522/2561 from 3.2678/2749 at yesterday’s close and gained against the euro to 4.6573/6625 from 4.6792/6886 previously.

It had also appreciated versus the British pound to 5.4169/4229 from 5.4305/4414 and increased vis-a-vis the Japanese yen to 3.2199/2237 from 3.2412/2479 yesterday.

On the stock market, Bursa Malaysia’s key index was slightly easier this morning as profit-taking started to emerge following the strong gains yesterday, while the broader market remained positive.

At 9.06am, the benchmark FTSE Bursa Malaysia KLCI slipped 0.26 of-a-point to 1,501.62 from 1,501.88 yesterday.

The market bellwether opened 0.18 of-a-point lower at 1,501.7. – Bernama

Brent edges lower, US crude holds steady

LONDON: Benchmark Brent oil edged lower on Thursday (Nov 24) while West Texas Intermediate (WTI) crude held steady, hovering in sight of two-month lows as the level of a proposed Group of Seven (G7) cap on the price of Russian oil raised doubts about how much it would limit supply.

A bigger-than-expected build in US petrol inventories and widening Covid-19 controls in China also added downward pressure on crude prices.

Brent crude futures were down 29 cents, or 0.3%, to US$85.12 (RM382.61) a barrel by 2015 GMT, while US WTI crude futures rose 2 cents, to US$77.96 (RM350.43).

Trading volumes were thin because of the Thanksgiving holiday in the United States.

Both benchmarks plunged more than 3% on Wednesday on news the planned price cap on Russian oil could be above the current market level.

European Union governments remained split over what level to cap Russian oil prices at to curb Moscow’s ability to pay for its war in Ukraine without causing a global oil supply shock, with more talks possible on Friday if positions converge.

The G7 nations are looking at a cap on Russian seaborne oil at US$65-US$70 a barrel, a European official said, though European Union governments have yet to agree on a price.

A higher price cap could make it attractive for Russia to continue to sell its oil, reducing the risk of a supply shortage in global oil markets.

Some Indian refiners are paying the equivalent to a discount of US$25 to US$35 a barrel to international benchmark Brent crude for Russian Urals crude, two sources said. Urals is Russia’s main export crude.

“The Russian price cap is another catalyst that served to get prices lower over the last little while,” said Bart Melek, global head of commodity market strategy at TD Securities, adding he was fairly bullish on oil despite the headwinds.

Oil prices also came under pressure after the Energy Information Administration said on Wednesday that US petrol and distillate inventories rose substantially last week.

But crude inventories fell by 3.7 million barrels to 431.7 million barrels in the week to Nov 18, compared with expectations for a 1.1 million barrel drop in a Reuters poll of analysts.

China on Wednesday reported the highest number of daily Covid-19 cases since the start of the pandemic nearly three years ago. Local authorities tightened controls to stamp out the outbreaks, adding to investor concern over the economy and fuel demand. – Reuters

Twitter job cuts a concern ahead of new rules: EU justice chief

BRUSSELS: Twitter’s decision to shut down its Brussels office and the laying off of thousands of employees are drawing concerns on whether the company can comply with new tough European Union (EU) rules against illegal online content, EU justice chief Didier Reynders (pic) said on Thursday (Nov 24).

Reynders, who met with Twitter representatives at the social media platform's European headquarters in Dublin, sought clarifications from the company, a European Commission official told Reuters.

“Twitter representatives reaffirmed the commitment of the company to ensure full compliance with EU rules. Commissioner Reynders took note of it and asked Twitter to translate this commitment into concrete measures,” the official said, speaking on condition of anonymity.

The new rules known as the Digital Services Act, which will apply from February 2024, require online platforms to do more to police the internet for illegal content or risk fines as much as 6% of their annual global turnover.

Twitter has fired top executives and enforced steep job cuts with little warning following billionaire Elon Musk’s tumultuous takeover of the company last month. About half of the workforce – around 3,700 employees – has been laid off while more than 1,000 have resigned.

Twitter’s last two Brussels-based employees are no longer with the company, a person familiar with the matter told Reuters, speaking on condition of anonymity. The team, which interacted with Commission officials on policy and regulatory issues, had originally numbered six people.

Reynders also warned Twitter and other tech companies to do more to tackle online hate speech after the latest data showed they had removed less content this year than in previous years. – AFP

Thursday, November 24, 2022

US weekly jobless benefits claims at three-month high

WASHINGTON: The number of Americans filing new claims for jobless benefits increased to a three-month high last week amid rising layoffs in the technology sector, but that likely does not suggest a material shift in labour market conditions, which remain tight.

Economists urged against reading too much into the rise in weekly unemployment benefit claims reported by the Labor Department on Wednesday (Nov 23), noting the data tend to be volatile at the start of the holiday season as companies temporarily close or slow hiring. Claims remain in line with pre-pandemic levels.

“It’s certainly possible that layoffs are helping to boost increases in claims filings,” said Isfar Munir, an economist at Citigroup in New York. “While this could be interpreted as evidence of a softening labour market, we would caution against this. The holiday season introduces a great deal of volatility into this data. It may be hard to disentangle the impact of seasonal patterns versus layoffs until January.”

Initial claims for state unemployment benefits rose 17,000 to a seasonally adjusted 240,000 for the week ended Nov 19, the highest level since mid-August. Economists polled by Reuters had forecast 225,000 claims for the latest week.

Moody's Analytics estimates the break-even level for claims at around 270,000. The jobs market has remained resilient in the face of the Federal Reserve’s (Fed) most aggressive interest rate-increasing cycle since the 1980s aimed at curbing high inflation by dampening demand in the economy.

Economists say massive swings because of the Covid-19 pandemic had distorted the seasonal adjustment factors, the model that the government uses to strip out seasonal fluctuations from the data.

According to Brean Capital senior economic adviser Conrad DeQuadros, seasonally adjusting the raw claims data with the average of the adjustment factors for 2005 and 2011, years that the calendar aligned with in 2022, would have resulted in claims rising only 3,000 last week.

“Nonetheless, the claims data should be closely watched in the coming weeks to see if this rise in claims is anything other than noise or poor seasonal adjustment,” DeQuadros said.

There has been an increase in layoffs in the technology sector, with Twitter, Amazon and Meta, the parent of Facebook, announcing thousands of job cuts this month. Companies in interest-rate sensitive sectors like housing and finance have also been sending workers home.

Unadjusted claims shot up 47,909 to 248,185 last week. They were boosted by a 5,024 jump in California, likely reflecting the technology sector job cuts. There were also big increases in filings in Georgia, Illinois, Minnesota, Iowa, New York, Ohio and Michigan.

Economists, however, did not expect the technology sector layoffs would be a major drag on the labour market and the overall economy. They noted businesses outside the technology and housing sectors were hoarding workers after difficulties finding labour in the aftermath of the Covid-19 pandemic.

This was acknowledged by some Fed officials in minutes of the US central bank’s Nov 1-2 policy meeting published on Wednesday. The minutes showed “these participants noted that this consideration had limited layoffs even as the broader economy had softened or that this behavior could limit layoffs if aggregate economic activity were to soften further.”

With 1.9 job openings for every unemployed person in September, some of the workers being laid off could find new employment quickly.

The claims report also showed the number of people receiving benefits after an initial week of aid increased 48,000 to 1.551 million in the week ending Nov. 12.

The so-called continuing claims, a proxy for hiring, covered the period during which the government surveyed households for November's unemployment rate. Continuing claims increased between the October and November survey periods. Economists, however, forecast the unemployment rate unchanged at 3.7%.

There were also signs of resilience in business spending on equipment, one of the two pillars of support for the economy. A separate report from the Commerce Department showed orders for non-defence capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.7% in October. These so-called core capital goods orders decreased 0.8% in September.

Shipments of core capital goods jumped 1.3% after dipping 0.1% in September. The report added to strong retail sales last month in suggesting that the economy continued to expand, though risks of a recession next year are mounting as the Fed's rate hikes are seen stifling demand.

A survey from S&P Global on Wednesday showed its flash US Composite PMI Output Index, which tracks the manufacturing and services sectors, contracting further in November, with a measure of new orders dropping to its lowest level in 2½ years.

“The recession is not here today, but we continue to believe that economic conditions will deteriorate in 2023,” said Oren Klachkin, lead US economist at Oxford Economics in New York. “The recession will be a ‘garden variety’ downturn because there are no glaring household or corporate sector imbalances.”

There was some rare goods news on the housing market, which has been pummelled by soaring mortgage rates. A fourth report from the Commerce Department showed new home sales, which account for 12.5% of US home sales, rebounded 7.5% to a seasonally adjusted annual rate of 632,000 units in October.

The National Association of Home Builders last week reported a sharp increase in builders offering incentives, including price cuts to sell homes.

“Although demand has fallen when compared to a year ago, many buyers are waiting in the wings for either a downward price adjustment or for mortgage rates to fall,” said Orphe Divounguy, senior economist at Zillow in Seattle. – Reuters

US stocks rise as Fed weighs slower rate hike pace

NEW YORK: Wall Street stocks rose for a second straight session on Wednesday (Nov 23) following Federal Reserve (Fed) minutes that signalled a moderation in its aggressive policy to counter inflation.

At its latest meeting in early November, a majority of Fed policymakers found that a slower pace of interest rate increases would “likely soon be appropriate”, according to the minutes.

The release came on the heels of mostly solid economic data and helped equities recover from a mid-session swoon.

The Dow Jones Industrial Average rose 95.96 points, or 0.28%, to 34,194.06, the S&P 500 gained 23.68 points, or 0.59%, at 4,027.26 and the Nasdaq Composite added 110.91 points, or 0.99%, at 11,285.32.

Trading volume was thin ahead of the Thanksgiving holiday today (Nov 24), with the US stock market open for a half-session on Friday.

“What equity markets needed to see for the recent strength to continue was what we got from the minutes,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

Since the Fed's last meeting on Nov 1-2, investors have been more optimistic that price pressures have started to ease, meaning smaller rate hikes could curtail inflation.

“What I think you’re seeing is renewed investor enthusiasm fuelled by those who see that beautiful light at the end of what has been a very dark tunnel. And there has been so much money on the sidelines that is rushing back into the markets and waiting to get back into the action,” said portfolio manager Moez Kassam of Anson Funds.

Earlier, reports showed surprisingly strong orders of big-ticket US manufactured goods in October, while new home sales defied expectations and rose during the same month.

Weekly jobless claims ticked higher, while a University of Michigan survey of consumer sentiment topped expectations.

Among individual companies, Deere & Co jumped 5% as it reported higher profits on a 37% surge in revenues to US$15.5 billion. Deere said industry conditions remained robust as it pointed to a “continuation of strong demand for farm and construction equipment”.

Software company Autodesk slumped 5.7% after it said free cash flow would be lower than expected in the near term because it sealed fewer multi-year contracts with up-front cash in a “challenging” macroeconomic environment.

Tesla Inc jumped 7.82% with Citigroup upgrading the electric-vehicle maker’s stock to “neutral” from a “sell” rating.

Nordstrom Inc fell 4.24% as the fashion retailer cut its profit forecast amid steep markdowns to attract inflation-wary customers. – AFP, Reuters

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