Stocks in Asia look set to kick off June lower after ending a month marked by intense volatility as fears of aggressive monetary tightening to fight inflation mounted. Treasury yields and the dollar jumped.
Futures fell in Japan, Australia and Hong Kong. US contracts inched higher in early Asia trading after the S&P 500 retreated, ending May virtually flat. The Nasdaq 100 also pulled back, falling for a fourth month in five.
Chinese stocks listed in the US posted their first monthly gain since October after easing lockdown measures raised hopes that economic activity will pick up.
Treasuries extended a decline, pushing 10-year yields up about 10 basis points as traders raised bets on Federal Reserve interest-rate hikes. Swaps show traders have almost fully priced in two half-point rate increases in June and July, with even odds of a third such hike in September. Adding to the inflation worries, crude oil rose about 10% in May and was up early in Asia Wednesday.
Keppel Corporation announced Tuesday (May 31) that wholly-owned subsidiary Keppel Seghers Engineering Singapore (KSES) has commenced arbitration proceedings against the Qatar Public Works Authority (PWA). KSES, a wholly-owned subsidiary of Keppel Infrastructure Holdings, on Tuesday filed a request for arbitration with the International Chamber of Commerce in Paris. The arbitration is for claims arising from a December 2007 contract, under which PWA appointed KSES for the design, build, operation, and maintenance of the Doha North Sewage Treatment Works project in Qatar. The claim amount is currently estimated to be approximately 457.7 million Qatari rial (S$172.6 million) with interest.
Property developer Chip Eng Seng Corporation announced Tuesday (May 31) that wholly-owned subsidiary CES Engineering & Construction has been awarded a S$173.5 million contract by the Housing and Development Board (HDB). The contract is for building works, including a community club and a park, in a neighbourhood in Hougang. Construction will start at the end of June, and is expected to take 48 months. The group beat 17 other construction companies in a government tender for the contract. Chip Eng Seng said the contract is not expected to have any material impact on its net tangible assets and earnings per share for the current financial year ending December.
The Monetary Authority of Singapore (MAS) will pilot an industry project to explore tokenisation of financial assets and develop finance infrastructure, signalling that while the crypto asset space is highly risky, it should be approached with an open mind, Deputy Prime Minister Heng Swee Keat said on Tuesday (May 31). “The way to approach Web 3.0 is to keep an open mind,” said Heng. “We must pierce through both the hubris and the veil of suspicion, to understand the potentially transformative underlying technologies. Let us not throw out the baby with the bath water.” DPM Heng was speaking at the opening of the Asia Tech x Singapore Summit 2022, a regional technology-focused conference. The programme, known as Project Guardian, will be a collaborative effort by MAS and industry players, with the first industry pilot set to explore potential DeFi applications in wholesale funding markets.
US consumer confidence eased slightly in May as concerns about high inflation persisted and perceptions of the labour market softened a bit, a survey showed on Tuesday (May 31). The Conference Board said on Tuesday its consumer confidence index slipped to a reading of 106.4 this month. Data for April was revised higher to show the index at 108.6 instead of the previous reported reading of 107.3. “The decline in the Present Situation Index was driven solely by a perceived softening in labour market conditions,” said Lynn Franco, senior director of economic indicators at The Conference Board in Washington. “By contrast, views of current business conditions, which tend to move ahead of trends in jobs, improved.”
Crude’s global benchmark Brent surged past US$120 a barrel on Tuesday (May 31), led by China’s easing of lockdown curbs and EU’s ban of Russian oil, with the kick off of the US and European summer driving seasons providing added impetus to the rally. Be prepared for further upside to the commodity’s price, say experts, given the robust momentum and strong fundamental support, chiefly deepening tight market conditions. “The forecast here has always been US$150 a barrel this year, risk US$180, and a move as high as the obscene, that is US$250 is not out of the question for 2023,” remarked ACY Securities chief economist Clifford Bennett.
HP reported sales and profit that topped analysts’ estimates on steady demand by companies upgrading computer systems. Still, the results pointed to some potential issues ahead for the hardware company as consumer spending fell for personal computers and printers. Fiscal second-quarter revenue increased 3.9 per cent to US$16.5 billion, Palo Alto, California-based HP said Tuesday (May 31) in a statement. Analysts, on average, projected US$16.1 billion. Most of the gains came from business demand for desktop computers. Fiscal second-quarter profit, excluding some items, was US$1.08 a share, topping estimates. HP said Personal Systems division revenue increased 9.2 per cent to US$11.5 billion, led by commercial sales. But consumer sales declined 6 per cent and notebook units declined 23 per cent in the period, which ended Apr 30. Printing revenue declined 7 per cent to US$5 billion, with total hardware units down 23 per cent.
Salesforce raised its annual profit forecast, signalling that demand for business software is holding up in the face of macroeconomic instability. The shares rose about 6 per cent in extended trading. Fiscal-year earnings, excluding some items, will be US$4.74 to US$4.76 a share, an increase of 12 US cents a share from the company’s previous forecast. Revenue will be as much as US$31.8 billion, San Francisco-based Salesforce said Tuesday (May 31) in a statement. Analysts, on average, estimated annual profit of US$4.68 a share, according to data compiled by Bloomberg.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
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