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 core inflation, which excludes volatile food and energy prices, unexpectedly rose in August, diminishing the odds of a significant interest-rate cut by the Federal Reserve next week. The core consumer price index (CPI) increased by 0.3% from July and 3.2% from a year earlier, driven by higher costs for housing and travel.
Key Takeaways:
Unexpected Inflation Pickup: The core CPI's 0.3% increase in August marks the highest monthly rise in four months, while the three-month annualized rate climbed to 2.1% from 1.6% in July. This is seen as a stronger indicator of underlying inflation trends compared to the overall CPI, which rose by 0.2% from the previous month and 2.5% year-on-year, marking its fifth consecutive month of decline due to lower gasoline prices.
Impact on Federal Reserve Policy: While the inflation reading is not expected to deter the Fed from cutting rates next week, it lessens the likelihood of a larger, half-point cut. The Fed remains focused on labor market softness, which is expected to influence policy discussions in the coming months. As a result, traders reduced the probability of a half-point rate cut to near zero. This led to a rise in Treasury yields, a slight dip in S&P 500 futures, and a partial recovery in the dollar.
Contributing Factors and Category Breakdown: The increase in core inflation was primarily driven by shelter costs, which rose by 0.5% — the most since the beginning of the year. Other contributing factors included higher prices for airfares, apparel, daycare, preschool, car insurance, and hotel stays. The category of shelter, especially owners' equivalent rent, played a significant role in the overall inflation measure.
Upcoming Data and Broader Inflation Measures: The core inflation measure will continue to be a key focus for policymakers, but the Fed also considers the personal consumption expenditures (PCE) price index, which places less weight on shelter costs and is currently trending closer to the Fed's 2% target. The PCE measure, which is influenced by both CPI and producer price index (PPI) data, is expected later this month, while the PPI report due Thursday is projected to show moderate wholesale inflation.
The recent data indicates a more complex inflation landscape, with rising costs in several areas potentially challenging the Fed's approach to rate cuts in the near term.
Comments
Post a Comment