KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
Bets on aggressive monetary easing in economies like the European Central Bank (ECB) and Bank of England (BOE) are complicating the Bank of Japan’s (BOJ) efforts to raise interest rates. As central banks in advanced economies signal rate cuts, the BOJ risks standing out as the only major central bank contemplating rate hikes.
BOE Governor Andrew Bailey indicated a shift toward a more active approach to lowering rates, while the ECB is facing increased speculation of aggressive rate cuts due to weak economic data in Canada and Sweden. Analysts at Evercore ISI noted that as other central banks ease rates, it becomes more challenging for the BOJ to raise its own rates.
Meanwhile, the Federal Reserve's recent 50-basis-point cut has further complicated the global outlook. Weak US jobs data in August increased the odds of more Fed action, coinciding with Japan’s recent rate hikes, which triggered a global selloff in Japanese equities.
Newly appointed Prime Minister Shigeru Ishiba has also signaled caution, stating that Japan's economy isn’t ready for more rate hikes. He met with BOJ Governor Kazuo Ueda, emphasizing the need to confirm a US soft landing before reducing stimulus.
Japan’s interest rate remains the lowest in the developed world at 0.25%, and while the BOJ is moving toward rate normalization, Ishiba and Ueda agree that now is not the time for further hikes. Analysts expect that if inflation stays elevated, the BOJ may consider a rate hike by January 2025. However, a delayed move could lead to complications, similar to the Fed’s experience with inflationary pressures in 2021 and 2022.
For now, the BOJ is keeping a close eye on global economic conditions and financial market stability, particularly in the US, before making any further moves.
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