02/05/2026

BIZ & FINANCE SATURDAY | MAY 2, 2026

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Singapore economy to ‘slow’ on Strait of Hormuz closure

Australia likely to avoid recession: ANZ SYDNEY: ANZ Group CEO Nuno Matos said yesterday Australia is likely to avoid recession but the economic consequences of war in the Middle East will be evident for the foreseeable future as tighter oil supply could accelerate inflation. The comments come after Australia’s fourth-largest bank by market capitalisation reported cash profit of A$3.78 billion (RM10.8 billion) for the six months through March 31, versus a Visible Alpha consensus of A$3.68 billion. The bank also said it will increase provisions by A$175 million to cover potential loan loss stemming from the US-Israel war with Iran. National Australia Bank and Westpac have similarly announced increased provisions and flagged the war’s economic consequences. They report first-half results next week. “Much of the potential impact of this crisis remains ahead of us,“ said Matos, who became ANZ CEO almost a year ago. “But the longer the flow of oil is constrained, the greater the chance the crisis shifts from being primarily an inflation challenge to much more of a supply and growth challenge.” The consumer price index jumped 1.4% in the first quarter of the year from the previous three months, the sharpest rise since late 2023, showed data released on Wednesday. It rose 4.1% versus the same period a year earlier. Matos said the conflict has had minimal impact on credit, capital or liquidity, and ANZ’s exposure to the Middle East was small. ANZ shares opened in positive territory on Friday but were trading down 1.1% versus a 0.95% rise in the S&P/ASX200. The decline came after analysts highlighted ANZ’s A$11.5 billion first-half revenue was 1.5% below market estimates. ANZ said its net interest margin, a gauge of profitability, was 1.53% for the first half, 1 basis point lower than the second half of 2025. The bank also increased the weighting of a “downside economic” scenario occurring, though Matos said consumer confidence and business conditions have not shown signs of deterioration. “This supports our central expectation that Australia will avoid a recession,“ he said. ANZ’s technology spending was worth A$1 billion in the first half as banks worldwide tackle the threat to banking posed by AI – especially Anthropic’s Mythos, the ability of which to expose vulnerabilities in security could be misused. The regulator on Thursday said banks’ security systems were not keeping pace AI development and that so-called frontier AI could bring faster and more severe cyberattacks. Matos said he expects more AI tools, similar to Mythos, will be developed which could increase threats to banks even more. “Cyber risk for society and financial services organisations is already very high,“ he said. – Reuters

“We must brace ourselves and be prepared for a more difficult period ahead. And I want to be upfront with all of you so that we are mentally prepared,” he said. Singapore, however, is dealing with the crisis from a position of strength because of policies it implemented in the past to build energy resilience, including being a major oil refining hub and energy trading centre. Even if the Strait of Hormuz reopens, a return to normal will likely not be immediate, Wong warned. “Ports and energy infrastructure have been damaged. “Shipping lanes will need to be cleared of mines,” he said. “Confidence must be restored that it is safe for ships to sail through, that insurance can be obtained, and people are prepared to take risks to go through the Strait.” – AFP

and Israel began bombing Iran on Feb 28. “Here in Asia, we are especially affected because of our high dependence on energy and other critical supplies from the Gulf,” Wong said. Some regional countries are already facing fuel shortages, airlines have cut flights and factories are reporting delays, he said. “Globally, inflation will rise, spreading from energy to food and then other essentials. “Some economies may well slip into recession, and Singapore will feel the impact directly,” he said. “Our growth this year will slow, and inflation will be higher, and all this will put real pressure on businesses, workers and households.” He did not give any figures, but the trade ministry in February said it expected the economy to expand 2%-4% this year, a bump from its previous forecast of 1%-3%.

o Be prepared for more difficult period ahead, says prime minister

SINGAPORE: Singapore’s prime minister warned yesterday that economic growth will slow this year and some countries may slip into recession as the Middle East crisis keeps the Strait of Hormuz closed. In a May Day speech, Lawrence Wong said the war was not expected “to be over anytime soon” and supply disruptions may worsen in the months ahead. Shipping through the Strait of Hormuz, which handles a fifth of global oil and gas, has been effectively stopped since the United States

A man jogs along the promenade near the financial business district in Singapore. – AFPPIC

Yen steadies after Japan govt intervention, traders brace for more action TOKYO: The yen trimmed gains against the dollar yesterday, but was still poised for its strongest weekly rally in more than two months after Japanese authorities stepped into the markets to haul the currency back from near two-year lows. The yen weakened 0.39% to 157.21 per dollar, but Thursday’s surge put the Japanese currency on course for a 1.35% jump this week, the most since mid-February. “Past intervention has had only a temporary effect on the yen if the underlying fundamentals haven’t shifted,“ said Kristina Clifton, senior currency strategist at Commonwealth Bank of Australia. The dollar index slid 1.76% in April after a surge in March that underscored the US economy’s relatively lower exposure to higher oil prices compared with the euro zone and Japan. The ECB and the Bank of England kept interest rates unchanged on Thursday, as expected, following holds earlier in the week by the Federal Reserve and Bank of Japan.

“Continued yen depreciation may prompt several rounds of intervention, which in turn would cause larger two-way swings in USD/JPY.” In the oil market, prices remained elevated following threats by Tehran of “long and painful strikes” on US positions if Washington renewed attacks on Iran. As a US legal deadline loomed for President Donald Trump to end the conflict, a senior administration official said late on Thursday that a ceasefire in place since April 7 constituted a termination of hostilities. The currencies of Japan and other nations dependent on energy imports had been in decline since late February, when US-Israeli strikes on Iran started, leading to the closure of the Strait of Hormuz shipping lane for oil.

The dollar index, which measures the greenback against a basket of currencies, rose 0.05% to 98.20, while the euro edged 0.04% lower to $1.1725. Japan’s top currency diplomat Atsushi Mimura yesterday said speculative positions remain in markets, putting traders on notice of possible further strikes to bolster the yen during the holiday period. Two sources familiar with the matter told Reuters that officials had intervened to buy the yen on Thursday, after it hit its weakest level against the dollar since July 2024. The sudden jolt in the dollar-yen rate occurred in London trading hours and followed earlier comments from Finance Minister Satsuki Katayama that the time for “decisive” action was nearing.

Investors remained on high alert for further action from Japan’s Ministry of Finance (MOF), with May 1 holidays thinning markets around Asia. A Japanese official hinted that further intervention could come as the nation heads into its Golden Week holidays next week. “The difficulty is they are sort of fighting against some underlying fundamentals there,“ Ken Crompton, the head of rates strategy at National Australia Bank, said about Japan’s intervention efforts. “The weak yen is probably there for a reason and how successful the MOF will be in fighting against the tide on a sustained basis is sort of hard to see at the moment,“ he added.

Even so, the ECB and BOJ signaled readiness to hike rates as soon as June to contend with imported energy inflation. Data yesterday showed Japan’s core inflation slowed in April as government subsidies blunted the effect of energy prices, but analysts expect price gains to accelerate from here, keeping pressure on the central bank to hike rates. “Combined with the Bank of Japan’s ‘hawkish hold,‘ if the market starts to price in a rate hike at the next meeting in June, yen buying could gather momentum,“ Sakura Koike, an analyst at Mitsubishi UFJ Bank, said in a note. – Reuters