KUALA LUMPUR, July 30 (Bernama) -- Bursa Malaysia's key index closed at an intraday high today, supported by continued buying interest even as renewed geopolitical tensions and a weaker overnight lead from Wall Street following the US Federal Reserve's (Fed) decision to stand pat on interest rates weighed on broader sentiment. The Fed has decided to hold rates steady for the fifth consecutive meeting, with the Federal Funds Rate unchanged between 3.50 per cent and 3.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.84 points to 1,720.40 from yesterday’s close of 1,715.56. The benchmark index, which opened 1.14 points lower at 1,714.42, hit its lowest level of 1,710.69 in early trade before gaining momentum for the rest of the day. However, the broader market was negative with losers outpacing gainers 581 to 411, while 612 counters were unchanged, 1,173 untraded, and 87 suspended. Turnover declined to 2.49 billion units valued at RM2.25 billion from ...
Howard Marks, co-chairman and co-founder of Oaktree Capital Management LP, expects US interest rates to stabilize between 3% and 4% after the Federal Reserve (Fed) begins its anticipated easing cycle. Speaking at a conference in Melbourne, Marks stated that while the Fed will likely lower rates from the current "emergency" levels of 5.25% to 5.5%, he does not foresee rates returning to near-zero levels as seen in previous years.
Key Insights from Marks' Remarks:
Fed Rate Cuts and Expected Range:
- Marks anticipates the Fed will reduce rates into the "threes" range, but believes they will remain there and not return to extremely low levels of 0.5% or 1%.
Market Expectations:
- His outlook aligns with market pricing, where futures traders expect rate reductions to pause around the 3% range. There is some disagreement in the market over the pace of these cuts, with some expecting a 50 basis point reduction and others anticipating a quarter-point decrease at the upcoming Fed meeting on September 17-18.
Reasons for Rate Cuts:
- Marks noted that the Fed had raised rates in response to an inflation "emergency" in recent years, which he now believes is over.
Economic and Investment Outlook:
- Marks suggested that while economic growth might be slower and profit margins could erode, the overall environment would return to "normal." However, he emphasized that this "normal" would differ from the past 40 years, with a mix of both good and bad times expected in the economic and investment world.
Perspective on China:
- Regarding China, Marks expressed his belief that the country would not isolate itself globally and would continue to engage with the world economy to achieve its growth targets. He emphasized that China would need global cooperation to reach its 5% growth goal and is unlikely to "go rogue" or abandon international partnerships.
Summary:
Marks foresees US interest rates settling between 3% and 4% after the Fed's expected rate cuts, diverging from the near-zero levels of the past. He suggests that the economic environment is returning to a new "normal," characterized by varied growth and challenges. Marks also highlighted China's continued engagement with the global economy to sustain its growth ambitions.
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