SIA’s deadly turbulence leaves one dead and 20 in intensive care
Twenty people remained in intensive care in Bangkok on May 22, more than 24 hours after deadly turbulence hit a Singapore Airlines C6L (SIA) flight and forced the plane into an emergency landing.
One British man was killed, and dozens of other people were seriously hurt after Flight SQ321 from London to Singapore suddenly lost altitude as it entered Thai airspace.
The latest update from hospital authorities in Thailand revealed the scale of the injury toll as bodies catapulted into the cabin roof and personal belongings were hurled around the aircraft.
Fourteen people on board needed surgery, Samitivej Srinakarin Hospital said on May 22. Altogether, some 58 patients in three hospitals and clinics in the Thai capital were still receiving treatment.
More than 100 people had required medical care immediately after the flight landed in Bangkok. — Bloomberg
We are very sorry for the traumatic experience that everyone on board SQ321 went through.
–— SIA CEO Goh Choon Phong apologising for the turbulence that caused a passenger to die and dozens more to be injured
Singapore keeps 2024 GDP growth forecast at 1% to 3%; expects gradual manufacturing and trade recovery
The Ministry of Trade and Industry (MTI) maintains Singapore’s 2024 GDP growth forecast at 1% to 3%. In 1Q2024, the economy grew 2.7% y-o-y, up from 2.2% in the previous quarter, driven by finance, insurance, transportation, storage and wholesale trade sectors.
Since the MTI’s Economic Survey of Singapore in February, the external economic environment has remained resilient. Particularly, economic growth in the US and China was better than expected in 1Q2024, largely due to stronger-than-expected domestic demand and external demand, respectively.
Growth in regional economies like South Korea and Taiwan was driven by strong demand for AI-related chips, supporting the global electronics recovery.
GDP growth in major economies is expected to taper in the coming quarters due to tight financial conditions but should pick up with anticipated policy rate cuts later in the year.
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The US growth outlook has slightly improved, driven by a resilient labour market and an AI-led investment boom. However, the strong first-quarter performance and persistent inflation may delay policy rate cuts by the US Federal Reserve.
Higher-for-longer interest rates are expected to weigh on the US economy in the immediate quarters before easing monetary policy in the later part of the year supports a pickup in growth.
Due to additional government support measures, China’s GDP growth in Asia is expected to be stronger than previously projected. Robust manufacturing investment is anticipated, supported by government backing for strategic industries and a trade-in programme, while government initiatives will boost infrastructure spending.
The recently announced property market support measures are likely to help stabilise the property market, which should lead to a modest recovery in consumption in the latter part of the year.
Meanwhile, GDP growth in most Southeast Asian economies is projected to be supported by resilient domestic demand, the continued recovery in tourism demand, and a pickup in external demand.
The ministry warns that global economic risks persist, particularly from potential geopolitical tensions in the Middle East or the war in Ukraine, which could disrupt supply chains and commodity markets, impacting global trade and growth. Disruptions to global disinflation could prolong tighter financial conditions, potentially exposing vulnerabilities in banking and financial systems. Finally, desynchronised monetary policies between emerging and advanced economies could increase volatility in capital flows and currency fluctuations.
Singapore’s manufacturing and trade-related sectors are also expected to grow gradually this year. Within the manufacturing sector, the electronics cluster is projected to recover gradually in the coming quarters, supported by demand for semiconductors for end-markets such as smartphones, PCs and AI.
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Growth in the electronics cluster will positively affect the precision engineering cluster and the wholesale trade sector’s machinery, equipment, and supplies segment. The chemicals cluster within the manufacturing sector is also projected to expand, partly due to capacity expansions in sustainable aviation fuel.
The manufacturing sector contracted by 1.8% y-o-y in 1Q2024, a reversal from the 1.4% growth in the previous quarter. The sector’s weak performance was mainly due to output declines in the biomedical, electronics and general manufacturing clusters.
The stronger-than-expected recovery in air travel and tourism will boost growth in aviation, tourism-related sectors like accommodation and air transport, and consumer-facing sectors like retail and food and beverage services.
For the year’s first quarter, the accommodation sector expanded by 14.4% y-o-y, accelerating from the 1.5% expansion in the preceding quarter. Growth of the sector continued to be bolstered by a strong recovery in international visitor arrivals, due in part to the mutual visa-free arrangement with China, as well as the robust lineup of international live entertainment, business and sporting events.
Singapore’s finance and insurance sector will receive support from increased tourist spending, benefiting the payments segment. The projected peak in global policy interest rates will also bolster the banking and fund management segments through higher commissions and fees.
The sector grew by 6.5%y-o-y in 1Q2024, up from 5.4% in the previous quarter. Increased transaction volumes across most asset classes boosted net fees and commission incomes in banking and fund management segments. — Khairani Afifi Noordin
Nvidia clears the way for AI stocks to keep powering higher
Nvidia Corp just gave the green light to traders betting that the rally in AI computing stocks — not to mention its own — has room to run.
Another estimate-thumping earnings report and forecast from the chipmaker sent its shares up more than 7% in post-market trading, putting to rest lingering concerns that the spending spree on data-centre gear over the past year might be due for a slowdown.
Shares of Asian semiconductor companies that are suppliers to Nvidia outperformed broader markets on May 23. South Korea’s SK Hynix Inc, which supplies high-bandwidth memory to the US chipmaker, gained 3.2%, while Taiwan Semiconductor Manufacturing Co, the maker of Nvidia’s chips, advanced 1.5% to a record. Japan’s Advantest Corp. rose 5.2%. The Bloomberg Asia Pacific Semiconductors Index reached its highest level in over three years.
In the US, Nvidia’s results sent a broad swath of hardware stocks rallying in after-hours trading. The biggest gainers were server makers Super Micro Computer and Dell Technologies, which climbed above 4%. Chipmakers Broadcom, Marvell Technology and Advanced Micro Devices also rose.
“We’re in a technology revolution and still in the early days of it,” Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, said after Nvidia’s results. “It is really hard to not be positive right now, especially on Nvidia.”
Nvidia’s postmarket gain sent the stock above US$1,000 ($1,349) for the first time. If the advance holds on May 23, the chipmaker is set to add more than US$100 billion in market value and push the stock’s rise for 2024 over 100%.
Helping to fuel Nvidia’s rally was its announcement of a 10-for-one stock split that the company said was aimed at making shares more accessible to employees and investors. The split would be Nvidia’s second in the past three years, with the stock climbing more than 500% since the last one was announced in May 2021.
Of course, stock splits have no fundamental effect on share value. They’re the stock market equivalent of exchanging a US$10 billion for 10 US$1 bills. Still, they tend to help drive buying from mom-and-pop investors, according to Alec Young, chief investment strategist at Mapsignals.
“The split is huge news,” Young said in an interview. “You shouldn’t underestimate the appeal of stocks that are retail favourites.”
For his part, Nvidia CEO Jensen Huang said demand for generative AI computing is expanding beyond cloud computing providers to other industries like automotive and health care.
The results provided further evidence to Michael Sansoterra, chief investment officer at Silvant Capital Management, that the AI rally will continue.
“It says not only is the data-centre spend strong for AI, but it also says that the folks working around the periphery will probably continue to do well,” he said. “That bodes well for the health of the AI market, which is still in its early stages.” — Bloomberg
Fed minutes show officials rally around higher-for-longer rates
Federal Reserve officials earlier this month coalesced around a desire to hold interest rates higher for longer, and “many” questioned whether the policy was restrictive enough to bring inflation down to their target.
Minutes from the two-day Federal Open Market Committee gathering ending May 1 showed that, while participants assessed that policy was “well positioned,” various officials mentioned a willingness to tighten policy further if warranted.
“Participants noted disappointing readings on inflation over the first quarter,” according to the minutes released on May 22 in Washington. The minutes showed “that it would take longer than anticipated for them to gain greater confidence that inflation was moving sustainably toward 2%.”
Officials also discussed holding rates steady for longer “should inflation not show signs of moving sustainably toward 2% or reducing policy restraint in the event of an unexpected weakening in labour market conditions,” the minutes said.
Following a first-quarter pickup in inflation, Fed officials have said they will hold interest rates at a 23-year high for longer than initially anticipated.
Chair Jerome Powell said at his May 1 press conference that it’s clear monetary policy is restrictive and that, over time, he expects the current level of rates to bring inflation down to the central bank’s 2% target. He added that the Fed’s next move would unlikely be a hike.
“We’ll need to be patient and let restrictive policy do its work,” he reiterated at an event in Amsterdam on May 14.
The minutes offered a more nuanced picture. Though officials viewed the policy as generally restrictive, policymakers pointed to the possibility of high interest rates having a smaller effect on the economy than in the past. They also said the long-run neutral rate — a level of rates that neither slows nor stimulates demand — may be higher than previously thought.
“Many participants commented on their uncertainty about the degree of restrictiveness,” the minutes said.
Atlanta Fed President Raphael Bostic said on May 21 that officials at the US central bank are holding active discussions about the neutral rate, adding, “Everyone is rethinking that dynamic.”
Since the Fed’s meeting in April, consumer price data showed a modest cooling in inflation following three months of higher-than-hoped readings. While price growth remains above the Fed’s goal, the latest figures alleviated some concern that it was reaccelerating.
Governor Christopher Waller welcomed the better inflation data in comments earlier this week but said he’d like to see several more good reports before lowering rates. He further distanced the Fed from potential rate hikes, instead opening the door to lower borrowing costs at the end of this year.
The minutes seem “somewhat inconsistent with the press conference,” said Torsten Slok, chief economist at Apollo Global Management.
The economy continues growing steadily, though recent retail sales and manufacturing reports suggest demand is easing. The labour market remains resilient but is also showing signs of cooling. Payrolls rose at the slowest pace in six months in April.
A softer inflation report for April and somewhat slower pace of hiring in April “validates” the higher for longer message Powell talked about in the press conference, said Stephanie Roth, chief economist at Wolfe Research.
According to futures markets, investors are betting on one to two rate cuts this year. While that view is similar to many forecasters, others expect more or less. Goldman Sachs Group CEO David Solomon said on May 22 that he predicts “zero” cuts in 2024.
Officials voted to slow the pace at which the central bank is shrinking its asset portfolio at their latest meeting, reducing the cap on runoff for Treasuries to as much as US$25 billion from US$60 billion starting in June. Investors had generally expected the cap to fall to US $30 billion.
The minutes showed almost all participants expressed support for the new cap. However, a “few” officials supported continuing the current pace of runoff or a higher cap on Treasuries than was decided on. — Bloomberg
