US October Inflation Numbers Lower Than Forecasted | 11 November 2022 | Daily Morning Note

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US consumer prices increased less than expected in October and underlying inflation appeared to have peaked, which would allow the Federal Reserve to dial back its hefty interest rate hikes.


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Key takeaways

Summary

The Straits Times Index extended its rally into a five-session rising streak on Thursday, even as key Asian markets fell on caution ahead of the release of key US inflation figures. The STI rose 0.2 per cent or 7.68 points to close at 3,173.18.

Wall Street stocks surged on Thursday and ended with steep gains, including a nearly 1,200-point jump for the Dow, as investors seized on data showing US inflation slowing to spark a rally. The Dow Jones Industrial Average jumped 3.7 per cent to finish at 33,715.37, while the broad-based S&P 500 jumped 5.5 per cent to end at 3,956.37. The tech-rich Nasdaq Composite Index was the big winner, soaring a whopping 7.4 per cent to 11,114.15.

Singapore News

Genting Singapore reported on Thursday a more than 100 per cent increase in net profit for its third quarter, on the back of stronger gaming and non-gaming revenue. Net profit for the three months ended Sep 30, 2022, rose to S$135.8 million from S$60.7 million in the same period a year ago, the operator of Resorts World Sentosa said in a business update filed to the Singapore Exchange.

Philippine liquor giant Emperador posted 11 per cent year-on-year revenue growth to 42.6 billion pesos (about S$1 billion) for the first nine months of 2022, driven by growth across the group’s whisky and brandy segments. On Thursday, the dual-listed company said its whisky segment revenue grew 16 per cent over the nine-month period mainly due to higher sales of single malts across almost all regions around the world, and the return of travel retail.

Despite no year-on-year change to its distributable income for the second half-year ended Sep 30, Frasers Logistics & Commercial Trust posted a lower distribution per unit (DPU) of 3.77 Singapore cents for the period, a 2.8 per cent fall from 3.88 cents. The real estate investment trust recorded a distributable income of S$139.6 million for H2, largely unchanged from a year ago.

US News

US consumer prices increased less than expected in October and underlying inflation appeared to have peaked, which would allow the Federal Reserve to dial back its hefty interest rate hikes. The consumer price index rose 0.4 per cent last month after climbing by the same margin in September, the Labour Department said on Thursday. Economists had forecast the CPI would advance 0.6 per cent. In the 12 months through October, the CPI increased 7.7 per cent after rising 8.2 per cent on the same basis in September.

Chinese electric vehicle maker Nio on Thursday reported a loss of $577.9 million for the third quarter, significantly wider than a year ago, despite strong revenue following a 29% increase in vehicle sales. Nio’s third-quarter earnings report showed revenue came in at $1.83 billion, up 32.6% from the third quarter of 2021.

AstraZeneca raised its full-year earnings outlook on Thursday after strong sales of its key cancer drugs helped it beat quarterly profit and revenue forecasts, driving its shares to a 2-1/2 month high. The Anglo-Swedish company said it managed to grow its business in China despite protracted COVID lockdowns and was no longer pursuing U.S. approval for its COVID-19 vaccine.

In our recommendation section...


Analyst Glenn Thumremains Overweight on Singapore’s banking sector.

He says: We remain positive on banks. Bank dividend yields are attractive at 5% with upside surprise due to excess capital ratios. We expect bank NIM to rise another 34bps in 4Q22. SGX is another beneficiary of higher interest rates.

 

And Analysts: Jonathan Woo, Maximilian Koeswoyo and Zane Aw remain overweight on FAANGM stocks.

They say in their report: Near term uncertainties such as rising inflation and weakening consumer demand continue to weigh on FAANGM. However, we remain OVERWEIGHT on FAANGM as we still believe that long term secular tailwinds remain intact.

 

Visit www.stocksbnb.com to view the research reports!

 

Singapore Banking Monthly – NIM and NII surge across the board
     
     Recommendation: Overweight (Maintained)
     
     Analyst: Glenn Thum
      

         
  • October 3M-SORA/3M-SIBOR was up by 44bps/78bps MoM to 2.28%/3.63%, the highest MoM increase since 1998.
               
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  • In the 3Q22 results, banks’ NII rose 42% YoY as NIM improved by 47bps with loans growth of 6%. Fee income was a drag, declining 14%. Banks raised their FY22e NIM guidance.
               
  •      
  • Singapore domestic loans grew 4.38% YoY in September, tracking our estimates, while Hong Kong’s domestic loans declined 1.81% YoY in September.
               
  •      
  • Maintain OVERWEIGHT. We remain positive on banks. Bank dividend yields are attractive at 5% with upside surprise due to excess capital ratios. We expect bank NIM to rise another 34bps in 4Q22. SGX is another beneficiary of           higher interest rates [SGX SP, BUY, TP S$11.71].
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FAANGM Monthly October 22 – Hampered by weak earnings
     

Recommendation: Overweight (Maintained)
      

Analysts: Jonathan Woo, Maximilian Koeswoyo, Zane Aw, Phillip Research Team

         
  •  The FAANGM was relatively flat in October, down only 0.2%. The Nasdaq fared slightly better, gaining 4.0%, while the S&P 500 outperformed, up 8% for the month.
               
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  • Aside from NFLX and AAPL, the rest of FAANGM disappointed during their 3Q22 earnings calls, weighed down by higher expenses and slowing revenue growth.
               
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  • META was the laggard, down 32% as earnings were cut in half compared with 3Q21, while NFLX was the biggest gainer, up 24% due to subscriber outperformance and an earlier-than-expected launch of its new ad-supported subscription plan.
               
  •      
  • Near term uncertainties such as rising inflation and weakening consumer demand continue to weigh on FAANGM. However, we remain OVERWEIGHT on FAANGM as we still believe that long term secular tailwinds remain intact.
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