KUALA LUMPUR, Sept 20 (Bernama) -- Bursa Malaysia ended higher on Friday in line with most Asian markets, mirroring gains from Wall Street, where investors welcomed the US Federal Reserve's substantial interest rate cut. The FTSE Bursa Malaysia KLCI (FBM KLCI) rose by 3.17 points, or 0.19 per cent, to 1,668.82 at the close from Thursday's close of 1,665.65. It opened 5.03 points higher at 1,670.68, trading between 1,668.48 and 1,674.04 throughout the session. In the broader market, gainers outpaced decliners 732 to 468, while 465 counters were unchanged, 850 untraded and 32 suspended. Turnover swelled to 4.19 billion units worth RM5.97 billion, from Thursday's 3.99 billion units worth RM4.08 billion. UOB Kay Hian Wealth Advisors head of investment research, Mohd Sedek Jantan, noted the FBM KLCI's gains were led by utilities, logistics, and banking stocks, reflecting improved market sentiment. Additiona
US stocks fluctuated as investors navigated fresh economic data and corporate earnings while preparing for key central bank decisions expected to shape global market trajectories.
After a US$2.3 trillion Nasdaq 100 wipeout, all eyes are on Microsoft Corp’s earnings to see if the tech giant can shift the market sentiment. Concerns persist that tech firms have yet to see returns from substantial investments in artificial intelligence. Microsoft's results will set the stage for upcoming reports from Meta Platforms Inc, Apple Inc, and Amazon.com Inc later in the week, alongside anticipation for the Federal Reserve's decision on Wednesday.
“It’s likely the Fed does signal that looming cut and given the recent pullback, that should help this rebound continue,” said Tom Essaye at The Sevens Report. “However, if the Fed does not signal a September rate cut, markets could get a bit ugly given recent tech weakness, especially if earnings underwhelm.”
Key Takeaways:
Fed's Decision: The Fed is expected to hold benchmark rates at their highest level in over two decades this week, with traders keenly watching for hints of potential policy easing.
Economic Data: US consumer confidence rose in July, and job openings exceeded forecasts, providing an improved outlook for the economy.
Market Performance:
- The S&P 500 hovered around 5,460.
- A gauge of the “Magnificent Seven” megacaps fell 0.5%.
- The Russell 2000 of small caps gained 0.4%.
- Microsoft Azure is investigating reports of connectivity issues globally.
- Advanced Micro Devices Inc climbed ahead of its results.
- PayPal Holdings Inc soared on a bullish outlook.
- Procter & Gamble Co sank on a sales miss.
Treasury and Yen: Treasury 10-year yields remained steady at 4.17%, while the yen weakened as the Bank of Japan began its two-day policy meeting. BOJ governor Kazuo Ueda is expected to outline plans for quantitative tightening and make a decision on the policy interest rate.
Goldman Sachs Forecast: Goldman Sachs CEO David Solomon now sees one or two Fed rate cuts later this year, a shift from his earlier prediction of no rate reductions in 2024. “One or two cuts in the fall seems more likely,” Solomon said, noting the impact of prolonged inflationary pressures on consumer behavior.
Historical Context:
- If the Fed starts a rate reduction cycle, stock bulls have history on their side. Historically, the S&P 500 has risen an average of 5% a year after the first cut following a rate hike cycle, according to CFRA. Additionally, the small-cap Russell 2000 Index has shown an average gain of 3.2% 12 months later.
As the market awaits the Fed's decision and major corporate earnings, investors remain cautiously optimistic about potential signs of economic stabilization and recovery.
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