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.
The US federal budget deficit surged to $1.9 trillion for the first 11 months of the fiscal year through August, marking a 24% increase from the same period last year, according to data released by the Treasury Department on Thursday. The deficit for August alone was $380 billion, a stark contrast to the surplus recorded in August 2023, after adjusting for calendar differences. This variance is largely attributed to an accounting adjustment following the rollback of the student-debt forgiveness plan.
The interest burden on outstanding US debt remains a significant drag on the budget. Interest costs for the first 11 months of the fiscal year totaled $1.05 trillion, up 30% from the previous year. This marks the first time interest costs have exceeded $1 trillion annually. However, as a share of gross domestic product (GDP), the ratio was higher in the early 1990s.
The Federal Reserve's aggressive interest-rate hikes aimed at curbing inflation have increased the cost of issuing debt for the federal government. The weighted average interest rate on outstanding US interest-bearing government debt was 3.35% at the end of August, up 43 basis points from the same month last year and the highest since 2009.
Factors Contributing to the Widening Deficit
Student Debt Forgiveness Rollback: The Supreme Court's decision to overturn the Biden administration's student-debt forgiveness plan resulted in an accounting adjustment that added $319 billion to the year-to-date budget deficit, according to Treasury officials.
Deferred Tax Payments: An influx of deferred tax payments from 2023, due to natural disasters in areas like California, inflated 2024 tax revenues. These deferred taxes amount to about $135 billion this year.
After adjusting for both the student debt and deferred tax accounting, the deficit is approximately 7% wider for the first 11 months of the fiscal year compared to the previous year.
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