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 ...
Cracks are beginning to show in the eurozone’s labor market, prompting the European Central Bank (ECB) to consider speeding up interest rate cuts. Despite record-low joblessness following the inflation shock, policymakers are now seeing early signs of a slowdown that has pushed them to back another reduction in borrowing costs this week.
While the ECB doesn’t have the same dual mandate as the Federal Reserve—which targets both price stability and full employment—a weakening labor market could still significantly impact the ECB’s inflation outlook. With major companies like BASF SE and Thyssenkrupp AG cutting staff, some officials fear a deeper deterioration that could rattle a region already on the brink of recession.
Economist Soeren Radde from Point72 expects the ECB to begin cutting rates this month and continue doing so, noting that the key concern is the labor market. ECB President Christine Lagarde, who in July cited the strength of the jobs market as a reason for cautious policy adjustments, may now have to change course as employment growth slows and job vacancies decline.
Although the data still points to a gentle cooling of the labor market, with employment growth at just 0.2% in the second quarter and vacancies falling to 2.6%, policymakers are increasingly concerned. For example, Volkswagen AG is considering closing plants in Germany, and Continental AG is making similar cutback plans, signaling eroding confidence in an economic rebound.
Goldman Sachs economists predict that unemployment in the eurozone will rise to 6.7% over the next several quarters, further supporting the case for ECB rate cuts at every meeting starting this week until the deposit rate drops to 2% from 3.5%.
A cooling labor market could also moderate wage increases, reducing inflationary pressures, a factor that Barclays economists have emphasized as crucial for controlling inflation. The ECB’s projections assume wage gains will slow, with ECB Chief Economist Philip Lane recently suggesting that a stronger jobs market helps achieve the 2% inflation target.
With mounting concerns over rising unemployment, economists like Karsten Junius from Bank J Safra Sarasin argue for front-loading rate cuts to prevent a severe slump.
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