Saturday, June 30th, 2018


Trump says Saudi king agreed to raise oil production up to 2 million barrels

WASHINGTON, June 30 ― US President Donald Trump said in a tweet today that Saudi Arabia's King Salman had agreed to his request to increase oil production “maybe up to 2,000,000 barrels” to offset production from Iran and Venezuela. Saudi…

Missouri appeals court tosses US$55m J&J talc-powder verdict

MISSOURI, June 30 ― A Missouri appeals court yesterday threw out a US$55 million (RM221.9 million) verdict against Johnson & Johnson in a lawsuit by a woman who claimed she developed ovarian cancer after using talc-based products, including…

China factory growth slows in June as trade tensions rise

BEIJING, June 30 ― Growth in China's manufacturing sector slowed in June after a better-than-expected performance in May, official data showed, as escalating trade tensions with the United States fuel concerns about a slowdown in the world's…

Thyssenkrupp, Tata Steel seal landmark steel joint venture deal

FRANKFURT, June 30 ― Germany's Thyssenkrupp and India's Tata Steel signed a final agreement today to establish a long-expected steel joint venture, the European steel industry's biggest shake-up in more than a decade. The final agreement comes…

European stock markets rebound after EU migration deal

NEW YORK: European stock markets rebounded on Friday after the EU struck a deal on migration, while Wall Street eked out modest gains behind an advance in petroleum-linked shares.

Key eurozone markets in Frankfurt and Paris were up by around one percent, with London posting much more modest gains.

“European markets are rising nicely in the wake of a migration deal in the European Union,” Charles Schwab analysts said.

The euro firmed on the deal, and was further underpinned by eurozone inflation rising to 2.0%, increasing expectations of an end to the European Central Bank's stimulus program in December.

EU leaders clinched a hard-won migration deal during all-night talks that Italy's hardline new premier said meant his country was “no longer alone” in shouldering the responsibility for migrants.

They also offered a concession to German Chancellor Angela Merkel, who faces a rebellion from within her own coalition government, with moves to stop migrants registered in Italy and other EU countries from moving to Germany.

Still, EU President Donald Tusk warned that difficult work lay ahead to make the agreement work in practice.

Wall Street stocks rose for a second day in a row, with petroleum-linked shares advancing as US oil prices closed at a fresh three-and-a-half year high.

Still US equity markets ended well below their session peaks, with several large banks, including Bank of America and JPMorgan Chase, finishing in negative territory after surging in the morning.

Analysts have cited worries about lower US Treasury yields, in addition to ongoing trade anxiety.

Flash in the pan?

“The week is ending in a very different frame to which it began, with solid gains for equities in the UK, Europe and across the Atlantic,” said Chris Beauchamp, chief market analyst at IG.

He wondered, however, whether this might be “just a flash in the pan, based on a misreading of the current ongoing trade war situation.”

Canada on Friday unveiled hefty tariffs on US$12.6 billion (RM50.8 billion) in US goods in retaliation for American tariffs on Canadian aluminum and steel.

Asian stock markets mostly closed higher at the end to a tumultuous quarter for global equities, with China-US trade tensions showing no sign of calming.

Trading floors have witnessed heavy selling in the past three months, as the two biggest economies exchanged threats of tariffs on tens of billions of dollars of imports, fueling fears for global growth.

An increasing source of concern for many investors is China, where the main stock market is in bear territory after losing more than 20 percent from a recent peak and the yuan continues to struggle.

Many analysts warn any trade war with the United States would likely hurt Beijing more, with growth in the Asian giant already showing signs of slowing this quarter and authorities looking to provide support.

Key figures around 2100 GMT

New York – Dow: UP 0.2% at 24,271.41 (close)

New York – S&P 500: UP 0.1% at 2,718.37 (close)

New York – Nasdaq: UP 0.1% at 7,510.30 (close)

London – FTSE 100: UP 0.3% at 7,636.93 points

Frankfurt – DAX 30: UP 1.1% at 12,306.00 (close)

Paris – CAC 40: UP 0.9 percent at 5,323.53 (close)

EURO STOXX 50: UP 0.9% at 3,395.60 (close)

Tokyo – Nikkei 225: UP 0.2% at 22,304.51 (close)

Hong Kong – Hang Seng: UP 1.6% at 28,955.11 (close)

Shanghai – Composite: UP 2.2% at 2,847.42 (close)

Euro/dollar: UP at US$1.1689 from US$1.1569 at 2100 GMT Thursday

Pound/dollar: UP at US$1.3213 from US$1.3078

Dollar/yen: UP at 110.61 yen from 110.49 yen

Oil – Brent Crude: UP US$1.59 at US$79.44 per barrel

Oil – West Texas Intermediate: UP 70 cents at US$74.15 per barrel — AFP

US$1 = RM4.03

Canada hits back at US with tariffs on metals, bourbon and orange juice

OTTAWA: Canada hit back at the United States on Friday with retaliatory tariffs on American summertime essentials including Florida orange juice, ketchup and Kentucky bourbon in its opening salvo in a trade war with President Donald Trump.

As temperatures and tensions increase, the measures targeting Can$16.6 billion (RM50.8 billion) in US steel, aluminum and consumer goods will take effect on Sunday, when Canadians celebrate a national holiday and just days before Americans celebrate Independence Day amid a heatwave expected in both countries.

The tit-for-tat duties are a response to the punishing US steel and aluminum tariffs imposed at the start of June. Ottawa also unveiled Can$2 billion (RM6.05 billion) in aid for the two sectors and their 33,500 workers.

Ottawa “had no choice but to announce reciprocal countermeasures to the steel and aluminum tariffs that the United States imposed on June 1, 2018,” Prime Minister Justin Trudeau told Trump in a call on Friday, according to a statement from his office.

“The two leaders agreed to stay in close touch on a way forward,” it said.

Canadian Foreign Minister Chrystia Freeland announced the tariffs at a steel facility in Hamilton, Ontario where she was flanked by brawny workers in yellow hardhats.

“We will not escalate and we will not back down,” she said, while noting that this trade action was the strongest Ottawa has taken since World War II.

But she said the move was made with “regret” and “very much in sorrow, not in anger” against a close ally.

The list of more than 250 US goods subject to Canadian duties — including Florida juice, Wisconsin toilet paper and North Carolina gherkins, which are labor intensive to produce — aim to pressure Trump supporters key states in November's US midterm elections.

The penalties will add 25% to the cost of US steel, and 10% to aluminum and consumer goods.

NAFTA negotiation ploy

Canada and Mexico initially were exempted from the US metals tariffs — as was the European Union — but Trump allowed the duties to take effect June 1 after talks stalled to revamp the 1994 trilateral North American Free Trade Agreement (NAFTA).

After the EU unveiled similar retaliatory tariffs, US Trade Representative Robert Lighthizer earlier this week lashed out calling them groundless and illegal.

“These retaliatory tariffs underscore the complete hypocrisy that governs so much of the global trading system,” he said in a statement, and “do great damage to the multilateral trading system.”

Business executives warned lawmakers this week that escalation into an all-out trade war would be devastating to the Canadian economy, which sends about 75 percent of its exports to the United States.

If Trump steps up his attacks on Canada's economy and imposes a 25% tariff on automobiles as threatened, it would lead to “carmageddon,” Flavio Volpe, president of the Automotive Parts Manufacturers Association, told a Commons committee hearing on Tuesday.

Canadians, however, are overwhelmingly in favor of the retaliation.

In Ottawa, officials and others have declined an invitation to the US ambassador's annual July 4th bash.

“I've politely declined because I'm not happy with the direction of the American government and their constant attacks on our country,” Ottawa Mayor Jim Watson told public broadcaster CBC.

Canadian patriotism, meanwhile, has flourished under hashtags like #BoycottUSA, #BuyCanadian and #VacationCanada that urge people not to buy American goods and travel packages.

Neighborly ties lowest in decades

Canada and the US are among the world's two largest trading partners with an estimated US$673.9 billion (RM2.71 billion) worth of goods and services exchanged in 2017, with the US scoring a small surplus (RM33.8 billion), according to the US government data.

The United States also is the top destination for Canadian vacationers, who made 42 million trips to the US in 2017.

But relations between these two neighbors have plunged to their lowest in decades, reaching new depths at the recent Group of Seven summit when Trump abruptly rejected the joint statement and insulted Trudeau.

On the campaign trail this week, Trump continued his attacks on Canadian dairy, wheat and duty-free customs allowances for Canadians returning home, saying they were scuffing up brand new shoes in order to sneak them in.

US Commerce Secretary Wilbur Ross last week defended the Trump administration's tariffs before Congress but admitted that Canada's steel industry was “not being accused of directly or individually being a security threat.”

Freeland took note, saying this was “self-evident.”

She also repeated that Trump's decision to invoke national security to justify the US tariffs on steel and aluminum imports was “insulting” to Canadian veterans who had stood by their US allies in conflicts dating back to World War I.

Canadian steel is used in American tanks, and Canadian aluminum is used in American planes.

The United States has a US$2 billion trade surplus on iron and steel products, and Canada buys more American steel than any other country, accounting for 50% of US exports, Freeland said. — AFP

Thyssenkrupp, Tata sign deal to become Europe’s second-biggest steelmaker

FRANKFURT AM MAIN: German industrial giant Thyssenkrupp said Friday it had finally agreed to the merger of its steelmaking business with India's Tata, making the merged firm Europe's second-biggest steelmaker.

Conceived to take on the flood of cheap Chinese steel unbalancing world markets, the merged firm known as “Thyssenkrupp Tata Steel” will be based in the Netherlands. It will be second only to ArcelorMittal in the European steel industry.

Thyssenkrupp's executive and supervisory boards agreed to “create a 50/50 joint venture, which will combine the European steel businesses of Thyssenkrupp and Tata Steel”, the Essen-based group said in a statement.

Final signatures would follow “shortly”, it added, while competition authorities in the European Union and other jurisdictions must still give the go-ahead.

Bosses hope the tie-up, which took more than two years to negotiate, will create between 400 and 500 million euros (RM1.8-2.3 billion) per year in savings.

The merged firm will boast 48,000 employees spread around 34 sites, producing around 21 million tonnes of steel per year for revenues of around 15 billion euros.

Thyssenkrupp and Tata previously warned that the merger would mean around 4,000 jobs will be slashed in both production and administration, split evenly between the two firms.

Last December, Thyssenkrupp offered guarantees against layoffs and site closures to powerful German trade union IG Metall.

Workers had demonstrated several times against the plans by the group, whose products range from elevators to submarines as well as steel. — AFP

China manufacturing activity slows in June

BEIJING: Chinese factory activity slowed in June, dropping from an eight-month high the previous month official data showed Saturday, missing expectations as the world's second-largest economy faces the prospect of a trade war with the US.

The Purchasing Managers' Index (PMI), a key gauge of factory conditions, came in at 51.5 in June, decelerating from 51.9 in May, the National Bureau of Statistics (NBS) said.

The number was below the 51.6 reading tipped in a Bloomberg News survey of economists.

Although the numbers indicate a slowdown, they held comfortably above the 50-point mark that separates expansion from contraction and were higher than the NBS's average reading of 51.3 for the first half of the year.

The declining figures come as trade tensions with the US have cast a shadow on China's export-oriented manufacturing sector, with both sides threatening potentially damaging tariffs on billions of dollars worth of goods.

Nevertheless, “the manufacturing industry's fundamentals are on the whole trending positive,” NBS analyst Zhao Qinghe said in a statement, adding that “manufacturing and demand are expanding at an overall steady pace.”

While large-scale enterprises continued to expand in June, small and medium-sized businesses are experiencing a contraction, he noted, with both groups dropping below the 50 point mark.

Activity at small and medium-sized businesses dropped 0.2 to 49.8 and 1.1 points to 49.9 respectively, he said.

Last Sunday, China's central bank said it would reduce the reserve requirement ratio for most banks in an effort to free up funding for small firms.

The move will not necessarily pay off, however.

“Looking ahead, we see increasing headwinds to the economy in the second half of the year from slowing credit growth,” Capital Economics said in a research note, adding that the risk of a China-US trade war is “adding to the uncertainty.” — AFP

After stellar run, smallcaps may see some turbulence

NEW YORK, June 30 — After a strong rally that saw the Russell 2000 notch a record in three straight sessions in June, smallcap stocks may be showing signs of slowing down, leading some market participants to question whether their recent…

Bursa M’sia to continue upward momentum next week

KUALA LUMPUR: Bursa Malaysia is expected to sustain its upward momentum to trade higher next week to the 1,720-point level following a rebound on Friday, said a dealer.

Hermana Capital Bhd Chief Executive Officer and Chief Investment Officer Datuk Dr Nazri Khan Adam Khan said markets retaliation to the potential global trade war had subsided and this would likely restore sentiment on global growth prospects.

“We hope that the trade fight between the United States (US) and China is just rhetoric. At the end of the day, we think the US may just want to get more bargaining power and that China will bite it,” he told Bernama, adding that US President Donald Trump's action was business-oriented.

Nazri Khan also hoped that the easing negative sentiment relating to the trade war would also stop the foreign fund outflow which went on for the past 10 trading days.

“Backed by the higher oil prices, we think it (easing negative sentiment) will also help the commodity prices and ringgit value against the US dollar,” he said.

On the local front, Nazri Khan said inflation rate was expected to decline in the second half of this year, to between one and two per cent, as the Goods and Services Tax (GST) is being abolished and to be replaced with the Sales and Services Tax (SST).

He said the SST was expected to have a lower per cent rate compared with the GST, and this would likely boost businesses and the ringgit.

Besides that, all eyes will also be on the announcement of the Pakatan Harapan led-government's full cabinet line-up, who will be sworn in on July 2, according to a statement by Istana Negara.

For the week just-ended, the local bourse trended mostly lower in line with regional peers, mainly weighed by the concerns of a global trade war and foreign fund selling.

However, the fall was halted on Friday following mid-year window dressing.

On a Friday-to-Friday basis, the benchmark FTSE Bursa Malaysia KLCI was 2.65 points easier at 1,691.50 from 1,694.15 last Friday.

The FBM Emas Index declined 12.53 points to 11,960.93 and the FBMT100 Index fell 0.71 of-a-point to 11,757.93.

The FBM 70 rose 65.26 points to 14,627.06 and the FBM Emas Shariah Index put on 50.66 points to 12,092.55.

The FBM Ace was 139.93 points lower at 5,127.53.

On a sectoral basis, the Finance Index dipped 205.05 points to 16,649.91, but the Plantation Index gained 24.40 points to 7,534.16 and the Industrial Index was up 8.56 points at 3,127.53.

Weekly turnover narrowed to 9.70 billion units worth RM10.52 billion against 10.19 billion units valued at RM11.81 billion last week.

Main market volume shrank to 5.90 billion shares valued at RM9.53 billion from 6.22 billion shares worth RM10.96 billion.

Warrants turnover improved to 2.75 billion units worth RM814.09 million from 2.44 billion units valued at RM590.20 million previously.

The ACE market volume increased to 2.58 billion shares valued at RM178.25 million versus 1.51 billion shares worth RM259.44 million.

The gold futures contract on Bursa Malaysia Derivatives is expected to continue its decline next week, on weaker demand following concerns over more interest rate hikes by the US Federal Reserve.

Phillip Futures Sdn Bhd dealer Chang Hui Ying said the US Commodity Exchange's gold market was also anticipated to be on a downtrend next week given that an interest rate hike would theoretically send gold prices lower.?

“In addition, with the strong dollar as investors' first choice of investment, demand for gold is expected to decline,” Chang told Bernama.

On a Friday-to-Friday basis, June 2018 fell 44 ticks to RM162.50 a gramme, July 2018 declined 29 ticks to RM163.60 a gramme, August 2018 eased 27 ticks to RM163.80 a gramme and September 2018 shed 28 ticks to RM164.10 a gramme.

Weekly turnover improved to 14 lots worth RM228,615 from eight lots worth RM132,140 in the previous week, while open interest was higher at 51 contracts from 38 contracts. — Bernama