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Market Daily Report: Selective Buying Of Defensive Stocks Lifts Bursa Malaysia Higher At Close

 KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
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S&P 500 Soars Amid Political Turmoil: Why Fed Rate Cuts Could Fuel Further Gains

Investor resilience has been a notable theme in the market, with the S&P 500 advancing in all sessions this week despite significant political drama. The index recorded a 2% gain, the most substantial weekly increase since April, driven by economic data that suggested a contraction in services industries and an uptick in the unemployment rate. These factors have bolstered optimism regarding potential Federal Reserve rate cuts.


Key Highlights/Takeaways
  1. Fed Dominance: The Federal Reserve remains a critical influence, with expectations of rate cuts continuing to support market sentiment.
  2. Treasury Yields and Dollar: Initial spikes in ten-year Treasury yields and the dollar, following President Joe Biden’s debate performance, were reversed, contributing to a stable market environment.
  3. High Valuations: The S&P 500 trades at 26 times earnings, the highest valuation on any Election Day since 1990, raising concerns about future performance.
  4. Sector Performance: Technology megacaps led the equity rally, driven by optimism around artificial intelligence earnings. Financial shares also advanced but at a slower pace.

Risks

  1. Political Uncertainty: The potential for significant shifts in fiscal policy remains uncertain, particularly with the upcoming election.
  2. High Valuations: Elevated price-earnings ratios suggest potential underperformance in the future, particularly for US megacaps.
  3. Market Dependence on Fed Policy: Continued reliance on Federal Reserve actions introduces risk, especially if rate cuts do not materialize as expected.

Conclusion

Despite a tumultuous political backdrop, the rally in risk assets continues, supported by expectations of Federal Reserve easing and a resilient economic outlook. However, high valuations and political uncertainties present risks that investors should monitor closely. The market's future performance will likely hinge on upcoming economic data and developments in fiscal policy.

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