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.
Britain’s private sector companies have reported a surge in confidence, hiring, and new orders following Labour’s landslide election victory. This development indicates potential stronger growth under the new government.
Key Highlights
Business Confidence:
- S&P Global’s purchasing managers’ index (PMI) in Britain rose to 52.7 in July from 52.3 in June, marking a two-month high and surpassing economists’ expectations. A PMI reading above 50 indicates growth.
Economic Indicators:
- New business orders grew at the fastest rate in 15 months.
- Hiring levels were the highest in more than a year.
- Business confidence rebounded in July, nearing a two-year high reached earlier in the year.
Political Impact:
- The Labour party’s large win has increased hopes for political stability and economic revival. Prime Minister Keir Starmer aims to enhance Britain’s growth rates and generate more tax revenue to improve public services.
- S&P noted that the positive outlook is linked to an improving economic backdrop, expectations of interest rate cuts, and political stability.
Sector Performance:
- The manufacturing PMI jumped to a 24-month high.
- The services sector continued to show solid growth.
Bank of England:
- Prices charged in the private sector rose at the slowest pace in over three years, which may influence the Bank of England's decision on interest rates.
- The easing price pressures increase the likelihood of a potential summer rate cut.
Future Considerations:
- Despite the positive trends, Chris Williamson, chief business economist at S&P Global Market Intelligence, warned that the renewed hiring trend could lead to pay pressures, potentially causing inflation to remain sticky in the coming months.
Conclusion
The Labour party’s election victory has had a notable positive impact on UK business confidence and economic activity, as reflected in the latest PMI data. The improved outlook suggests potential for stronger economic growth and increased hiring, although inflationary pressures remain a concern. The Bank of England's upcoming decisions on interest rates will be closely watched as the new government seeks to stabilize and grow the economy.
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