KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
US bonds extended their losses, as strong labor-market data forced traders to reduce their expectations for aggressive Federal Reserve rate cuts. Treasury yields climbed, with key yields rising above 4% for the first time since August. The 10-year yield reached 4.03%, while the two-year yield jumped to 4.02%.
Traders now see a reduced likelihood of rate cuts, with money markets pricing in less than 50 basis points of reductions by year-end. The chance of a 25 basis point cut in November has dropped to 80%, signaling a shift in sentiment from previous forecasts of more significant cuts.
The strong September jobs data has reignited concerns of an overheating economy, potentially leading the Fed to maintain higher rates for longer. The bond market is adjusting to this new reality, with futures positioning and options market activity reflecting the likelihood of only a small cut.
Economists from Citigroup and Goldman Sachs noted that the jobs report has accelerated discussions around policy tightening, with Citigroup maintaining a forecast for a quarter-point cut in November. However, some economists believe labor market weakness will resurface, potentially leading to a 50-basis point cut in December.
Investors are now awaiting further insights from upcoming Fed speeches and the release of US inflation data later this week. The Consumer Price Index (CPI) is expected to show a modest 0.1% rise for September, which could further shape rate cut expectations.
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