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.
Despite the Federal Reserve's half-percentage-point interest rate cut last week, public sentiment about the economy remains uncertain. While lower rates have begun making credit cheaper for households and businesses—leading to reductions in mortgage rates and corporate bond yields—the impact has yet to be fully felt by consumers.
The Fed's recent move marks the first in a series of expected rate cuts, aimed at easing credit conditions and potentially improving the financial outlook for Americans. However, it is unclear how quickly this will influence voters' perceptions ahead of the November 5 US presidential election.
Inflation has dropped sharply, with the consumer price index (CPI) falling from over 9% in mid-2022 to 2.6% in August 2024. Yet, Americans like Julie Miller from Nevada, one of the battleground states, still face economic pressures. While Miller's daughter struggles to buy a home due to high prices, rising costs at places like Taco Bell have forced Miller to cut back on spending.
Although borrowing costs for home mortgages and other loans have declined, the shift in consumer sentiment may take longer. The Fed's cuts have reduced the average rate on 30-year fixed-rate mortgages to near 6%, but economists expect mortgage rates to stabilize rather than drop further. Banks are gradually lowering rates on auto and personal loans, but many consumers have yet to feel the full benefits of these changes.
Surveys suggest that while inflation is easing, only 25% of Americans believe the economy is heading in the right direction. The University of Michigan's consumer sentiment index also shows that confidence has dropped in recent months, signaling that the public's mood may take time to recover, even as the Fed continues its rate cuts.
Fed Chair Jerome Powell emphasized that the central bank will adjust the pace of further rate reductions based on real-time economic data, aiming to balance inflation control with a healthy labor market. However, the full impact of these policy changes on public sentiment and consumer behavior remains to be seen.
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