KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
The European Central Bank (ECB) maintained interest rates as expected on Thursday, with President Christine Lagarde indicating that a rate decision for September remains "wide open."
Key Points:
Current Rate Decision:
- The ECB kept interest rates unchanged after last month's rate cut from record highs.
- Lagarde highlighted persistent domestic inflation and sticky wage growth as reasons for caution in future rate adjustments.
Economic Outlook:
- Lagarde noted that risks to growth are "tilted to the downside," reflecting potential negative impacts from global economic weakness and high interest rates.
- The euro zone economy likely grew slower in Q2 than the 0.3% growth in Q1 2024.
- Investment indicators suggest muted growth in 2024.
Future Rate Decisions:
- The ECB emphasized data-driven decisions and refused to pre-commit to any specific rate path.
- Lagarde stated that the September rate decision is "wide open" and did not repeat her previous assertion that a strong likelihood of monetary policy easing was underway.
Market Expectations:
- Markets are pricing in almost two rate cuts by the ECB for the remainder of the year and over five by the end of next year.
- The euro eased slightly after the ECB's decision, which had been anticipated by policymakers.
- Stefan Gerlach, chief economist at EFG Bank, noted that the ECB might follow the US Federal Reserve's expected rate cut in September.
Challenges and Data:
- The ECB faces challenges in balancing wage and price pressures with economic growth.
- A significant amount of economic data, including growth, wages, productivity, and inflation, is expected before the September policy meeting.
- The ECB will provide new inflation and growth projections at the September meeting.
Inflation Concerns:
- Domestic prices, particularly for services, and relatively quick wage growth are primary concerns.
- Existing multi-year wage deals suggest easing wage pressures later this year, potentially leading to more favorable inflation numbers.
The ECB remains cautious in its approach, keeping future rate decisions flexible while closely monitoring economic indicators and inflation trends.
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