KUALA LUMPUR, Nov 5 (Bernama) -- Bursa Malaysia closed higher, buoyed by Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 2.75 per cent, alongside positive cues from Wall Street. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 19.30 points, or 1.19 per cent, to 1,635.86 from Wednesday’s close of 1,616.56. The benchmark index opened 6.72 points higher at 1,623.28, and fluctuated between an intraday high of 1,642.44 and a low of 1,622.62 during the trading session. However, market breadth was negative, with losers outnumbering gainers 723 to 497, while 466 counters were unchanged, 1,075 untraded and 10 suspended. Turnover rose to 3.74 billion units valued at RM3.61 billion compared with yesterday’s 2.81 billion units valued at RM2.57 billion.
Australian retail sales saw a surprising increase in August, fueled by recent tax cuts and unseasonably warm weather, leading to heightened consumer spending on dining and clothing. This robust performance supports the argument for keeping interest rates stable in the near term.
Sales rose 0.7% from the previous month, surpassing the expected 0.4% increase and marking the largest monthly gain since January, according to official figures released on Tuesday. This follows a modestly revised 0.1% uptick in July.
Market Reactions and Economic Indicators
In response to the strong retail figures, the Australian dollar strengthened and yields on policy-sensitive three-year government bonds experienced a slight rise.
“More people were out dining at cafes and restaurants, enjoying the warm end to the winter months,” noted Robert Ewing, head of business statistics at the Australian Bureau of Statistics. This August marked the warmest on record since 1910, which likely contributed to the increase in consumer activity.
Retail sales are a crucial factor in economic policy decisions, particularly since consumer spending accounts for over half of the country's gross domestic product (GDP). The Reserve Bank of Australia (RBA) has consistently underscored the uncertain outlook for household spending following 13 rate hikes from May 2022 to November 2023.
Year-on-Year Comparisons and Future Outlook
According to Tuesday's data, retail sales rose 3.1% year-on-year, compared to 1.7% in August 2023. This positive shift coincides with the implementation of government tax cuts and energy rebates that took effect on July 1. Additionally, the household savings ratio has declined, suggesting increased consumer confidence and spending capacity.
The RBA is scheduled to meet again in November, with economists and market analysts anticipating a potential rate cut. However, the central bank has set a high threshold for further tightening and has indicated that it is too early to consider rate reductions. The prevailing consensus is that the RBA will maintain rates at 4.35% for the remainder of the year, although a cut cannot be dismissed, especially if third-quarter inflation data, set to be released at the end of this month, is unexpectedly low.
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