KUALA LUMPUR, July 30 (Bernama) -- Bursa Malaysia's key index closed at an intraday high today, supported by continued buying interest even as renewed geopolitical tensions and a weaker overnight lead from Wall Street following the US Federal Reserve's (Fed) decision to stand pat on interest rates weighed on broader sentiment. The Fed has decided to hold rates steady for the fifth consecutive meeting, with the Federal Funds Rate unchanged between 3.50 per cent and 3.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.84 points to 1,720.40 from yesterday’s close of 1,715.56. The benchmark index, which opened 1.14 points lower at 1,714.42, hit its lowest level of 1,710.69 in early trade before gaining momentum for the rest of the day. However, the broader market was negative with losers outpacing gainers 581 to 411, while 612 counters were unchanged, 1,173 untraded, and 87 suspended. Turnover declined to 2.49 billion units valued at RM2.25 billion from ...
China's consumer prices increased for the fifth consecutive month in June but fell short of expectations, while producer price deflation continued, highlighting the slow recovery of domestic demand despite government support measures.
Key Takeaways:
Consumer Price Index (CPI) Performance:
- The CPI rose 0.2% in June from a year earlier, compared to a 0.3% increase in May, marking the slowest growth in three months. This was below the 0.4% increase predicted by economists.
- Month-on-month, the CPI edged down 0.2%, worsening from the 0.1% decline in May and missing expectations of a 0.1% fall.
Producer Price Index (PPI) Decline:
- The PPI fell 0.8% in June from a year earlier, a smaller decline than the 1.4% drop in May, matching the forecasted 0.8% fall. This marks the smallest PPI decline in 17 months.
Food Prices and Domestic Demand:
- Food prices fell 2.1% year-on-year, with significant declines in fresh vegetables (7.3%) and fresh fruit (8.7%). Despite supply disruptions caused by bad summer weather, demand remained soft.
- The decline in gasoline prices accelerated to 6% in June from 5.2% in May, while new energy vehicle prices fell 7.4% against a 6.9% decline in May.
Economic Concerns:
- The slow recovery in domestic demand has been attributed to a protracted housing downturn and job insecurity, impacting consumer and industrial activity.
- Policymakers' efforts to encourage spending have seen limited success, and calls for effective policy measures are increasing.
Government Measures and Policy Response:
- There are expectations for further monetary policy easing from China's central bank in response to the soft inflation and weak credit data.
- An overhaul of the consumption tax may be announced at an upcoming leadership gathering, potentially shifting local officials' focus from manufacturing to consumer base expansion.
Risks:
Risk of Deflation:
- The ongoing risk of deflation remains a concern, with weak domestic demand and falling food prices indicating potential deflationary pressures.
Excess Manufacturing Capacity:
- The deepening declines in factory-gate prices of consumer durables highlight the issue of excess manufacturing capacity, which may worsen with continued government focus on investment over consumption.
Economic Outlook and Consumer Confidence:
- Persistent economic challenges, including the housing downturn and job insecurity, could continue to dampen consumer confidence and spending, hindering economic recovery.
Policy Effectiveness:
- The effectiveness of government support measures and monetary policy easing in stimulating demand and addressing fundamental economic issues remains uncertain.
China's economic landscape is navigating a complex set of challenges, with weak domestic demand and persistent deflationary pressures highlighting the need for effective policy responses to support recovery and stabilize growth.
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