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 ...
The US manufacturing sector showed a slight improvement in August, with the Institute for Supply Management (ISM) manufacturing Purchasing Managers' Index (PMI) rising to 47.2 from an eight-month low of 46.8 in July. Despite this uptick, the overall trend remains subdued, reflecting continued contraction in the sector.
Key Insights from the ISM Manufacturing Report:
Continued Contraction in Manufacturing:
- The PMI reading remained below the 50 threshold for the fifth consecutive month, signaling contraction in the manufacturing sector, which accounts for 10.3% of the US economy. However, the index stayed above the 42.5 level, which the ISM associates with expansion in the overall economy over time.
Decline in New Orders and Production:
- The forward-looking new orders sub-index fell to 44.6 in August from 47.4 in July, indicating weaker demand. Additionally, the production sub-index dropped to 44.8 from 45.9, reflecting a further decline in output. This suggests that the sector is still facing challenges, despite some improvement in employment.
Input Prices and Inflation Trends:
- Manufacturers reported higher prices for inputs, with the measure of prices paid increasing to 54.0 from 52.9 in July. This rise is likely due to soaring freight rates, suggesting that deflation in goods prices may have ended, although it may not significantly impact overall inflation, which has been slowing. Goods prices were unchanged in July after falling for two months.
Supplier Deliveries and Employment:
- The measure of supplier deliveries decreased to 50.5 from 52.6 in the prior month, with a reading above 50 indicating slower deliveries. Factory employment continued to contract, but at a slower pace, with the employment measure rising to 46.0 from 43.4 in July.
Outlook and Implications:
The slight improvement in manufacturing activity suggests that the sector is stabilizing but still faces headwinds from weak demand and high input costs. The Federal Reserve is expected to consider these economic indicators at its upcoming policy meeting on September 17-18, where it may begin cutting interest rates in response to broader economic trends. The overall outlook for manufacturing remains cautious, with persistent contraction in key areas like new orders and production.
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