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.
US prices saw a moderate increase in June as a decline in goods prices helped offset a rise in service costs. This development suggests an improving inflation environment, potentially positioning the Federal Reserve to begin cutting interest rates in September.
Key Points:
- Moderate Price Increases: The personal consumption expenditures (PCE) price index rose 0.1% in June, following a flat reading in May. Goods prices fell by 0.2%, while services costs increased by 0.2%.
- Yearly Gains: The PCE price index climbed 2.5% year-on-year, the smallest increase in four months, down from 2.6% in May. The core PCE price index, which excludes food and energy, rose 0.2% in June, maintaining a 2.6% year-on-year increase.
- Consumer Spending Slowdown: Consumer spending increased by 0.3% in June, down from 0.4% in May. When adjusted for inflation, real consumer spending rose 0.2% after a 0.4% increase in May. Personal income growth slowed to 0.2%, with wages rising 0.3%.
- Economic Impact: Economic growth averaged 2.1% in the first half of the year, down from 4.2% in the second half of 2023. The cooling demand is attributed to the Federal Reserve's aggressive monetary policy tightening in 2022 and 2023.
- Fed’s Response: The Federal Reserve will meet on July 30-31. Signs of easing inflation and cooling demand may lead to rate cuts, with financial markets anticipating three rate cuts starting in September.
- Market Reaction: US Treasury yields fell, and the dollar weakened slightly following the inflation data release.
Detailed Breakdown:
- Goods Prices: Declined by 0.2%, with significant decreases in motor vehicles and parts (-0.6%), furnishings and durable household equipment, and gasoline and energy goods (-3.5%).
- Services Costs: Increased by 0.2%, driven by housing and utilities, financial services, and insurance, although transportation services prices fell.
- Income and Savings: Personal income rose by 0.2% in June, wages increased by 0.3%, and the saving rate slipped to 3.4% from 3.5%.
Outlook:
The combination of moderate inflation and cooling consumer spending provides the Federal Reserve with a basis for considering interest rate cuts. The central bank’s next policy meeting could be pivotal in determining the future direction of interest rates, with the potential for easing starting in September.
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