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.
The Japanese yen surged over 2% against the US dollar after a weaker-than-expected US inflation report, sparking talk of potential market intervention by Japanese authorities.
Yen's Rapid Rise
The yen jumped by as much as four yen to 157.44 per dollar following news that US core consumer prices rose the least in nearly three years. This sudden increase has led to speculation that Japan may have stepped in to support its currency.
Masato Kanda, Japan’s top currency official, neither confirmed nor denied an intervention, saying any such action would be disclosed at the end of the month. The timing of the yen's movement, immediately after the inflation data, has fueled these speculations.
Market and Analyst Reactions
“The timing, after weak CPI, looks like it could be intervention,” said Takafumi Onodera from Mitsubishi UFJ Trust & Banking Corp. This sentiment reflects widespread market suspicion.
The yen recently hit its weakest level since 1986, prompting Japanese authorities to express concern over rapid currency movements. Earlier this year, the Ministry of Finance intervened by buying ¥9.8 trillion to stabilize the yen.
Strategist Insights
Experts remain divided on whether the recent yen movement was due to options trades or direct intervention. Valentin Marinov from Credit Agricole noted the yen's spike seemed exaggerated compared to US market reactions. Ed Al-Hussainy from Columbia Threadneedle Investment suggested that market positioning for US rate changes influenced the yen's movement.
Bloomberg strategists believe that Japan's Ministry of Finance might prefer to act when other factors already favor a lower USD/JPY, as was the case with the recent inflation data.
Key Takeaways
- Yen's Surge: The yen rose over 2% against the dollar after weaker US inflation data.
- Intervention Speculation: Japan’s top currency official did not confirm an intervention but mentioned it would be disclosed later if it occurred.
- Previous Interventions: Japan's Ministry of Finance previously intervened to support the yen earlier this year.
- Market Reactions: Analysts are divided on the cause of the yen's movement, suggesting it could be either market positioning or direct intervention.
Investors and traders will continue to monitor Japanese authorities' actions and further economic data for impacts on the yen.
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