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.
Global bond markets have rebounded from earlier losses this year, driven by mounting concerns about the US economic outlook. The shift toward fixed-income assets reflects investors' growing caution in response to a series of disappointing economic indicators.
Key Developments
Bloomberg Global Bond Index:
- The index, which tracks global sovereign and corporate debt, has gained 1% for 2024 after experiencing a decline of 4.6% in mid-April.
- The index surged 2.3% last week alone, marking a significant turnaround.
US Treasury Yields:
- 10-Year Yields: Fell five basis points in Asia on Monday, following a 19 basis points drop on Friday.
- The decline in yields was triggered by the worse-than-expected US non-farm payrolls report, which showed a slowdown in hiring and an increase in the jobless rate to a three-year high.
Asian Bond Markets:
- Japan's 10-Year Benchmark Yield: Plunged 17 basis points.
- New Zealand's 10-Year Yields: Dropped 10 basis points.
Market Reactions and Insights
Renewed Demand for Fixed Income:
- Prashant Newnaha, a senior rates strategist at TD Securities in Singapore, noted the turmoil in Japanese stocks and described the situation as "absolute chaos," leading to increased demand for global fixed-income assets.
- He indicated that the decline in US yields has "further room to run," suggesting continued interest in bonds.
Traders' Expectations for Fed Rate Cuts:
- The recent weak economic data has led traders to increase bets on Federal Reserve rate cuts.
- Citigroup Inc. and JPMorgan Chase & Co. now expect the Fed to lower its benchmark rate by 50 basis points at both its September and November meetings.
Economic Context and Outlook
US Economic Indicators:
- The disappointing payroll data has intensified concerns about the US economy, contributing to the shift toward bonds as a safer investment option.
Global Market Sentiment:
- The global bond market's recovery underscores the uncertainty surrounding economic growth prospects and the potential for further monetary easing by central banks.
Conclusion
The recovery in global bond markets reflects growing investor caution amid a deteriorating US economic outlook. As traders anticipate potential rate cuts by the Federal Reserve, the demand for fixed-income assets is likely to remain strong, providing a buffer against ongoing market volatility. The focus will continue to be on economic data releases and central bank actions, which will shape the trajectory of global financial markets in the coming months.
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