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Asian stocks extend gains, dollar dips as US data builds on rate hope

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Asian equities rose and the dollar slipped further on Thursday as investors welcomed more data pointing to a softening labour market that gives the Federal Reserve room to cut interest rates, with another key jobs report due later in the day.

The advances tracked another record on Wall Street on a holiday-shortened day, while national elections in Britain and France are also on the radar over the next few days.

After a recent poor run for stocks, the mood on trading floors has lightened this week thanks to figures indicating the US labour market was tightening and inflation retreating.

On Wednesday, figures showed the private sector created fewer jobs than expected last month, while first-time and continuing claims for jobless benefits also topped forecasts.

Also, a survey showed services sector activity contracted in June at the fastest pace in four years.

That all came after news Friday that the personal consumption expenditures (PCE) index — the Fed’s preferred gauge of prices — had dipped further in May.

Adding to the feel-good factor were comments this week from Fed chief Jerome Powell, who said the battle against inflation had made “progress” and “substantial” work had been done on softening the labour market.

Markets are pricing in nearly two rate reductions this year, starting in November.

Still, minutes from the central bank’s June policy meeting showed officials remained cautious about cutting too soon and wanted to see more evidence prices were under control.

While inflation remains sticky and is tempering expectations, softening data in May “adds to our growing confidence that price rises won’t reaccelerate from here”, said Henk-Jan Rikkerink, of Fidelity International.

“The range of outcomes when it comes to the magnitude of potential rate cuts by the Fed have narrowed significantly since the start of the year.

“We think that the bar for the cutting cycle to start remains high but recent progress on the inflation front has been encouraging.”

On Wall Street, the Dow ended slightly lower, but the S&P 500 and Nasdaq chalked up more record highs.

And the gains filtered through to most of Asia, with Tokyo, Hong Kong, Sydney, Seoul, Taipei, Manila and Jakarta ascending.

Shanghai, however, bucked the trend again, with traders still on edge about the state of the world’s number two economy.

Zhiwei Zhang at Pinpoint Asset Management warned “people don’t have strong confidence in economic outlook. Stronger policy support would help, from both monetary and fiscal fronts. China has a high real interest rate and a conservative fiscal policy stance for now”.

And Capital Economics’ Thomas Mathews said there were concerns among Chinese investors domestically and globally, and while they could ease over time “Chinese equities seem set to go their own way for a while yet”.

The dollar dipped further against its major peers after the jobs readings, with the euro getting a little help from news that more than 200 centrist and left-wing candidates had pulled out of Sunday’s legislative election runoff in France in a bid to beat the far right.

President Emmanuel Macron hopes the move will unify the vote and thus block the far-right National Rally (RN) of Marine Le Pen from gaining power after it saw massive gains in the first round Sunday.

However, analysts warned that the country — the second biggest economy in the European Union — could be headed for a period of political deadlock if there is no overall winner in the polls.

The pound was enjoying support ahead of Thursday’s general election, which is expected to see the opposition Labour Party win a landslide against the ruling Conservatives after 14 years in government.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.2 percent at 40,666.78 (break)

Hong Kong – Hang Seng Index: UP 0.2 percent at 18,015.49

Shanghai – Composite: DOWN 0.2 percent at 2,975.23

Euro/dollar: UP at $1.0792 from $1.0786 on Wednesday

Pound/dollar: UP at $1.2752 from $1.2737

Dollar/yen: DOWN at 161.37 yen from 161.52 yen

Euro/pound: DOWN at 84.63 pence from 84.65 pence

West Texas Intermediate: DOWN 0.5 percent at $83.47 per barrel

Brent North Sea Crude: DOWN 0.5 percent at $86.94 per barrel

New York – Dow: DOWN 0.1 percent at 39,308.00 (close)

London – FTSE 100: UP 0.6 percent at 8,171.12 (close)

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Dhaka Bourse on Green Despite Sluggish Indices

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dse dhaka bourse index turnover

Dhaka Stock Market DSE, Bourse on the second working day of the week, 15th July, ended with a gaining performance in Indices and Turnover from the previous working session. This information is known from DSE sources.

662 crore 24 lakh taka shares were traded on this day. 39 crore 98 lakh more tradings were done in DSE today compared to the previous workday, July 12th, Shares worth Tk 622 crores 25 lakh shares were traded last time, Sunday.

The benchmark DSEX increased 2.17 points or 5,484 The Shariah-based index DSES added 0.72 points or 1,203 and the blue-chip index DS30 gained by 7.17 points or 1,937.

Of the issues traded, 140 advanced, 191 declined and 66 remained unchanged.

Information Services Netowrk Limited ranked top gainer on DSE, the share price increased by Tk 4.50 paisa or 9.93 percent. On this day, the share was last traded at Tk 49.80 paisa.

Linde Bangladsh Limited ranked top loser on the DSE, the share price dropped by Tk 33.40 paisa or 3.00 percent. On this day, the share was last traded at Tk 1,080.10 paisa.

DSE topped on trade is Orion Infusion Limited 57 crore 23 lakh takas of company shares have been traded.

A total of 40 companies’ shares were traded in the Block on Dhaka Stock Exchange. A total of 1 crore 53 lakh 88 thousand 588 shares of the companies were traded. The financial value of which is 51 crore 12 lakh taka

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Stocks mixed, dollar rises as traders weigh Trump shooting

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Asian markets were mixed Monday as investors weigh the impact of the assassination attempt on Donald Trump with data suggesting it has boosted his chances of being re-elected president.

Eyes are also on a key meeting of China’s top leadership in Beijing, with hopes for measures to boost the world’s number two economy, which grew less than expected in the second quarter.

Investors struggled to extend the rally enjoyed on Wall Street, where all three main indexes ended on a positive note despite a forecast-topping read on US wholesale prices.

The figures were not enough to overshadow Thursday’s news that the consumer price index had slowed more than expected in June, which ramped up bets on a Federal Reserve interest rate cut in September.

That came after central bank chief Jerome Powell told lawmakers that inflation did not need to come in at decision-makers’ two percent target for them to begin lowering borrowing costs.

However, investors are keeping a close eye on developments in the United States after Trump was hit with a bullet on Saturday at a rally ahead of the Republican convention this week.

While the odds of him beating President Joe Biden had been rising in recent weeks, they got an extra lift from the shooting.

Observers said a Trump victory could see lower corporate taxes — a boost for companies’ bottom lines — but also an increase in tensions with China with fresh tariffs possible.

Still, Katrina Ell at Moody’s Analytics said: “The assassination attempt might lead to a temporary boost in the polls for Trump, but a lot can change before November.

“Financial markets are expected to soon refocus on the Federal Reserve and the growing likelihood of a rate cut in September.”

The dollar rose Monday, having softened last week owing to the prospect of lower rates, while equity markets were mixed.

Hong Kong, Shanghai, Seoul, Taipei and Jakarta dropped, while Sydney, Singapore, Manila and Wellington rose.

Official data showed the Chinese economy expanded just 4.7 percent in the second quarter, well below the 5.1 percent forecast in a survey by Bloomberg.

Separate data showed retail sales slowed sharply in June as the country’s army of consumers remain cautious.

The readings highlight the tough work leaders face as they grapple with a real estate debt crisis, weakening consumption, an ageing population and trade tensions with Western rivals.

President Xi Jinping and other top leaders are gathered in Beijing to hammer out plans to kickstart growth, though analysts warned there was unlikely to be any major announcement for the short-term.

“A Trump victory would be damaging for China’s economy given manufacturing and exports are powering the recovery,” Moody’s Ell added.

“Trump has indicated a number of significant trade barriers would be imposed on China under his leadership.”

– Key figures around 0230 GMT –

Hong Kong – Hang Seng Index: DOWN 0.9 percent at 18,123.67

Shanghai – Composite: DOWN 0.2 percent at 2,965.55

Tokyo – Nikkei 225: Closed for a holiday

Dollar/yen: UP at 158.04 yen from 157.88 yen on Friday

Euro/dollar: DOWN at $1.0889 from $1.0906

Pound/dollar: DOWN at $1.2966 from $1.2989

Euro/pound: DOWN at 83.95 pence from 83.97 pence

West Texas Intermediate: DOWN 0.5 percent at $81.80 per barrel

Brent North Sea Crude: DOWN 0.5 percent at $84.64 per barrel

New York – Dow: UP 0.6 percent at 40,000.90 (close)

London – FTSE 100: UP 0.4 percent at 8,252.91 (close)

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SK Trims’ Bank Accounts Frozen Amid Corruption Probe

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The Bangladesh Financial Intelligence Unit (BFIU) has frozen the bank accounts of SK Trims and Industries, a publicly traded company allegedly owned by the family of former National Board of Revenue (NBR) official Matiur Rahman. This action follows court orders and a recommendation from the Anti-Corruption Commission (ACC), as disclosed today on the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) websites.

Key Figures and Investigation
Media reports indicate that MA Kaium Howlader and Md Nurul Huda, brothers of Matiur Rahman, hold significant positions in SK Trims, serving as Managing Director and Sponsor Director, respectively. The ACC is currently probing Matiur Rahman’s assets on allegations of amassing illegal wealth.

On July 11, a Dhaka court mandated the freezing of 116 bank accounts and 23 beneficiary owner (BO) accounts, along with the seizure of multiple properties belonging to Matiur Rahman and his family.

Company Disclosure and Response
In a recent disclosure, SK Trims confirmed that the Metropolitan Sessions Judge Court and the BFIU had frozen all their bank accounts based on the ACC’s recommendation. Efforts to reach Md Riaz Haider, the company secretary, and Md Nazmul Hossain, the Chief Financial Officer (CFO), for comments were unsuccessful.

According to SK Trims’ annual report for 2022-23, the company maintains over a dozen bank accounts across various banks, including fixed deposit receipts (FDRs), loans, and other accounts critical for its business operations.

Stock Market Performance and Financial Impact
SK Trims was listed on the stock exchange in 2018, raising Tk30 crore through an initial public offering (IPO) to expand its business. The company’s share price has fluctuated significantly following allegations against Matiur Rahman. From Tk27.6 per share on June 20, it fell to Tk24.4 on July 2, then briefly rose to Tk27 on July 9, before declining again, closing at Tk24.8 on the DSE yesterday.

Business Operations and Investments
SK Trims specializes in manufacturing various products for the export-oriented garment industry, including sewing thread, elastic, poly, cartons, photo cards, backboards, barcodes, hang tags, tissue paper, and gum tape.

The company has invested Tk17 crore in seven companies as of June 30, 2023. Among these, Dominage Steel Building Systems, Mamun Agro Products, Acme Pesticides, and Asiatic Laboratories are listed on the bourses, while Anik Trims, B Brothers, and Banbiz (Pvt) remain non-listed. It is unclear whether SK Trims has sold or still holds shares from these investments.

Revenue and Profit Growth
SK Trims reported a 40% increase in revenue to Tk92 crore for the first nine months of the 2023-24 fiscal year, with net profit soaring by 86% to Tk8.81 crore. These figures surpassed the company’s annual revenue and profit of Tk88.75 crore and Tk7.97 crore, respectively, for the 2022-23 fiscal year. The company paid a 3% cash dividend to its shareholders in FY23 and its shares are currently trading in the B category.

As of June 30, sponsor-directors held 31.23%, institutional investors 28.86%, and the general public 39.91% of the company’s shares.

Industry Concerns
Ziaur Rahman, General Secretary of the Benapole Landport Importers and Exporters Association, expressed concerns over the significant losses traders face with perishable food products due to halted trade services. “Since the goods trucks cannot enter after the evening, the trade deficit will increase,” he noted.

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