KUALA LUMPUR, June 5 (Bernama) -- Bursa Malaysia closed higher, with the benchmark index rising 0.60 per cent as bargain-hunting persisted following the recent sell-off, despite weaker performances across regional markets. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) gained 10.17 points to 1,693.43 from Thursday's close of 1,683.26. The benchmark index opened 3.19 points higher at 1,686.45 and traded between 1,684.36 and 1,698.53 during the trading session. However, broader market sentiment remained negative, with losers outnumbering gainers 666 to 477. A total of 574 counters were unchanged, 958 untraded and 12 suspended. Turnover fell to 3.41 billion units worth RM3.04 billion from 3.47 billion units worth RM3.58 billion on Thursday.
According to the latest Bloomberg Markets Live Pulse survey, gold is deemed the best portfolio hedge in the event of Donald Trump’s potential return to the White House, surpassing the US dollar as the preferred safe haven.
Key Takeaways:
Survey Insights:
- Among 480 respondents, proponents of gold outnumbered those favoring the US dollar two-to-one.
- Over 60% expect the dollar to weaken if Trump wins another term.
Historical Context:
- During Trump’s previous term, a Bloomberg gauge of the dollar dropped more than 10%, while gold prices surged over 50%.
Inflationary Policies:
- Trump’s policies, including tax cuts, tariffs, and deregulation, are seen as inflationary, potentially leading to further Fed interest rate hikes.
- A Republican majority in Congress could amplify these economic policies, boosting gold prices, which are already near all-time highs.
Gold's Strong Position:
- Gregory Shearer of JPMorgan Chase & Co. notes that geopolitical tensions, the growing US deficit, reserve bank diversification, and inflation hedging have all driven gold prices higher. These factors could be magnified under a Trump 2.0 scenario.
Investor Sentiment:
- Survey respondents anticipate disruptions to markets and trade, and rapid increases in the US national debt under a second Trump presidency.
Gold Demand Dynamics:
- Gold’s previous gains during Trump’s term were partly driven by investors seeking safety during the Covid-19 pandemic.
- The current macro backdrop is favorable for bullion, with the Fed expected to cut interest rates in September and central banks increasing their gold holdings since 2022 to diversify away from the dollar.
Diverging Views on the Dollar:
- Two-thirds of survey responders believe Trump’s reelection would undermine the dollar’s status as the world’s reserve currency.
- StoneX Group’s chief market strategist, Kathryn Rooney Vera, supports this view, citing client portfolios adding gold in anticipation of a weaker dollar.
Controversy Over Dollar’s Future:
- Some Wall Street economists argue that Trump’s policies could strengthen the dollar due to harsher tariffs and deficit-boosting fiscal measures interrupting Fed rate cuts.
- Respondents are divided on the impact of Trump’s economic policies on the dollar, with some predicting de-dollarization and a sovereign debt crisis regardless of the election outcome.
Geopolitical Implications:
- The dollar and US Treasuries are traditionally viewed as global havens during geopolitical stress, but the survey suggests the greenback may not benefit from US political volatility.
Survey Details:
- Conducted from July 22 to July 26, the MLIV Pulse survey included Bloomberg News terminal and online readers worldwide, comprising portfolio managers, economists, and retail investors.
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