The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
KUALA LUMPUR (May 12): The FBM KLCI tumbled more than 1% when markets closed on Thursday (May 12) while Bursa Malaysia’s Technology index was worst hit among the bourse’s 30 gauges as forecast-beating US inflation dented world markets which are seen taking cue from anticipation of US interest rate hikes to fight rising consumer prices.
At 5pm, the KLCI closed down 17.13 points or 1.1% at 1,538.8 while Bursa’s Technology index fell 4.44% to become the worst-hit gauge in percentage terms. All 30 Bursa indices ended lower.
It was reported that US data showed higher-than-expected core inflation, excluding items such as oil prices and that some investors appeared encouraged by the annual consumer price growth change to 8.3% in April from 8.5% in March even though it was above the 8.1% analyst estimate.
It was reported that while some investors were encouraged by the year-over-year improvement, others noted inflation was still red hot and that this was highlighted by oil futures rally.
"This is all about concern about a recession. The inflation numbers we got this morning (May 11, 2022) were not good, worse than expectations ... There's high food prices and increasing concern inflation numbers are going to be sticky on the high side," Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, was quoted as saying by Reuters.
The strategist also pointed to a flattening yield curve, which refers to the difference between long-term and short-term Treasury yields as an ominous sign.
"We've a very flat yield curve that's been flirting with inversion. That scares traders about the prospects for a recession. There's too many investors out there who believe the Fed can engineer a soft landing. That looks increasingly doubtful,” Ghriskey said.
Meanwhile, Bernama reported that across Bursa, losers trumped gainers 874 to 209, while 336 counters were unchanged.
Total turnover widened to 3.61 billion units worth RM2.51 billion on Thursday from 2.4 billion units worth RM1.91 billion on Wednesday.
Rakuten Trade Sdn Bhd vice president of equity research Thong Pak Leng said key regional indices were mostly in the negative territory following the continued selldown on Wall Street as investors remained jittery about the faster interest rate hikes.
On the domestic front, he said the KLCI has breached the 1,540 support level, hence the local market may experience some headwinds amidst heightening regional volatility.
"However, we believe that this provides buying opportunities, given the cheap valuation of local equities against regional peers.
"As such, we expect the KLCI to trade within the range of 1,535-1,550 towards the weekend, with immediate support at 1,530 and resistance at 1,575," he told Bernama.
Among the KLCI’s 30 components, Malayan Banking Bhd’s share price dropped three sen to RM9.07, Public Bank Bhd and Petronas Chemicals Group Bhd both fell two sen to RM4.63 and RM9.87, respectively, while IHH Healthcare Bhd gained three sen to RM6.45.
Source: The Edge
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