DAILY MORNING NOTE | 1 June 2023

The local stock market took a hit on Wednesday (May 31), alongside other markets in the region, as China’s latest manufacturing purchasing managers index slid again in May. Singapore stocks slumped 0.9 per cent or 28.76 points to close at 3,158.80. Decliners far outpaced advancers 348 to 231, with 2.7 billion securities worth about S$2.8 billion changing hands over the course of the trading day. The Nikkei 225 lost 1.4 per cent; the Hang Seng Index slipped 1.9 per cent, and the Kospi fell 0.3 per cent.

Wall Street stocks retreated Wednesday as markets awaited a key congressional vote to lift the US debt limit, while data pointed to weakening Chinese manufacturing activity. Investors are hopeful that the United States can avert a debt default following the passage of a compromise package late on Tuesday in a key House committee, a development expected to foreshadow full House approval on Wednesday evening. The Dow Jones Industrial Average finished down 0.4 per cent at 34,908.27. The broad-based S&P 500 shed 0.6 per cent to 4,179.83, while the tech-rich Nasdaq Composite Index also dropped 0.6 per cent to 12,935.29.

SG

The voluntary unconditional cash offer for Global Palm Resources (GPR) closed on Wednesday (May 31), with the offeror receiving valid acceptances representing approximately 93.1 per cent of the total number of issued shares. The palm oil producer’s chief executive Suparno Adijanto, along with his six family members, had in March launched an offer of S$0.25 per share for all the issued and paid-up ordinary shares in GPR to take it private. This was done through an investment vehicle, ATH Holdings, of certain members of the Adijanto family and the holding company of GPR.

Offshore and marine stalwart Seatrium, formerly known as Sembcorp Marine (Sembmarine), and individuals from the company are being investigated by the Corrupt Practices Investigation Bureau (CPIB) for alleged corruption offences. In a press statement on Wednesday (May 31), CPIB noted that it was acting on information received. “As investigations are ongoing, CPIB will not be able to provide further details at this juncture,” it said.

Singapore-headquartered crypto data company Nansen said it is laying off 30 per cent of its workforce, citing broader difficulties in the crypto market. The firm had tried to expand into business areas that were not core to the company’s strategy, Nansen CEO Alex Svanevik said in a statement posted on Twitter. Founded in 2019, the startup’s expansion coincided with a boom in demand for crypto asset services and investment. Venture capital firms Accel, GIC and Andreessen Horowitz are among those to have backed the company, according to its website.

US

Oil prices settled lower on Wednesday, pressured by a stronger US dollar and weak data from top oil importer China that fed demand fears. Brent crude futures for August delivery settled down US$1.11 to US$72.60 a barrel. US West Texas Intermediate crude (WTI) settled down US$1.37, or 2 per cent, to US$68.09. At their session lows, both benchmarks were down more than US$2 to multi-week lows. On Tuesday, both fell more than 4 per cent. Oil prices tumbled after Chinese data showed manufacturing activity contracted faster than expected in May, as weakening demand cut the official manufacturing purchasing managers’ index (PMI) down to 48.8 from 49.2 in April, lagging a forecast of 49.4.

Salesforce reported an earnings and revenue beat and lifted its full-year earnings guidance, but the stock dropped as much as 7% in extended trading as capital costs were higher than analysts expected. Capital expenditures in the quarter totaled $243 million, up about 36% and above the $205 million consensus estimate. Concerns about costs overshadowed the company’s 11% increase in revenue for the quarter that ended on April 30. Net income in the quarter totaled $199 million, or 20 cents per share, up from $28 million, or 3 cents per share, in the year-ago quarter.

Lucid Group said on Wednesday that it is raising about $3 billion through a new equity offering, with the majority coming from the Saudi fund that controls the luxury electric-vehicle maker. Lucid said that about $1.8 billion of the total will come from a private placement of stock with Saudi Arabia’s Public Investment Fund (PIF). The remainder will be raised through a public offering of new shares that commenced Wednesday, the company said. The PIF owns about 60.5% of Lucid. The new funding round is structured to keep its stake at the same level. Lucid said it will use the new cash for “general corporate purposes,” including capital expenditures and working capital. Shares of the company fell more than 6% after hours.

Nordstrom’s fiscal first-quarter sales topped Wall Street’s expectations on Wednesday, even as the retailer reported a spending drop and predicted slower sales in the coming months. In the fiscal first quarter, Nordstrom’s net loss was $205 million, or $1.27 per share, compared with a net income of $20 million, or 13 cents per share, in the year-earlier period. The company’s total revenue, including credit card sales, fell about 11% from $3.57 billion in the year-ago quarter, but surpassed Wall Street’s expectations. Nordstrom expects revenue to fall 4% to 6% and adjusted earnings per share to range between $1.80 and $2.20 for the fiscal year, excluding the impact of winding down its stores and online business in Canada.

Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR

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