KUALA LUMPUR, June 22 (Bernama) -- Bursa Malaysia ended on a softer note today as investors engaged in profit-taking following the recent rebound in the local market, an analyst said. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) declined by 0.65 per cent, or 11.19 points, to 1,700.84 from last Friday's close of 1,712.03. The benchmark index opened 1.56 points lower at 1,710.47 and moved between 1,699.94 and 1,712.32 throughout the trading session. Market breadth was negative, with decliners outnumbering gainers 560 to 481. A total of 608 counters were unchanged, 1,649 untraded, and 14 suspended. Turnover slipped to 3.29 billion units worth RM2.40 billion from 3.45 billion units worth RM3.79 billion on Friday.
US consumer confidence took its sharpest dive in three years this September, driven by growing fears about the labor market, according to the Conference Board’s survey released on Tuesday. Despite this decline, more households indicated plans to buy homes in the coming months, reflecting mixed sentiment about the economy ahead of the November 5 presidential election.
The survey also revealed that consumers expect inflation to rise in the coming year, clouding their outlook on the broader economy. However, interest in travel, dining out, and entertainment remains strong, potentially supporting continued consumer spending and economic growth.
Last week, the Federal Reserve cut interest rates by 50 basis points, marking the first reduction since 2020, with the rate now in the 4.75%-5.00% range. Fed Chair Jerome Powell indicated that the cut was aimed at maintaining low unemployment, currently at 4.2%.
"The plunge in consumer confidence underscores the growing pressure on many households as the labor market weakens," said Ben Ayers, a senior economist at Nationwide. Ayers suggested that if the Fed continues its easing cycle, it could restore consumer optimism and help avoid a "hard landing" for the economy.
Biggest Drop Since 2021
The Conference Board’s consumer confidence index fell to 98.7 in September, down from an upwardly revised 105.6 in August, marking the largest drop since August 2021. Economists had forecast a rise to 104.0. The sharpest decline in confidence came from consumers aged 35 to 54 and those earning less than $50,000 annually.
Concerns about the labor market were prominent, with the percentage of consumers viewing jobs as "plentiful" dropping to 30.9%, the lowest since March 2021, while those saying jobs were "hard to get" rose to 18.3%.
The survey's labor market differential, a key indicator of job availability, narrowed to 12.6, the smallest gap since March 2021. Economists noted that this shrinking differential could suggest a rising unemployment rate, though broader economic data shows resilience in consumer spending.
Mixed Buying Plans and Inflation Concerns
While confidence in the labor market weakened, plans to buy homes surged, with 5.7% of consumers indicating an intention to purchase a home in the next six months, the highest level since August 2023. This jump aligns with a decline in mortgage rates to 18-month lows and cooling house price inflation.
Plans to buy big-ticket appliances such as vehicles and refrigerators also increased, though intentions to purchase items like television sets and washing machines declined.
Consumers’ 12-month inflation expectations rose to 5.2% from 5.0% in August. If inflation expectations continue to rise alongside a softening labor market, the Fed may face challenges in recalibrating monetary policy, according to Conrad DeQuadros, a senior economic advisor at Brean Capital.
A report from the Federal Housing Finance Agency showed that single-family home prices rose by 0.1% in July, with a 4.5% increase year-over-year, the smallest annual rise since June 2023.
Despite growing economic concerns, lower mortgage rates are expected to sustain demand in the housing market and prevent a significant decline in home prices.
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