KUALA LUMPUR, Dec 4 (Bernama) -- Bursa Malaysia rallied to close broadly higher on Wednesday amid strong buying interests mainly in utility and technology stocks, with the benchmark index gaining 0.44 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 7.13 points to 1,614.09 from Tuesday’s close of 1,606.96. The index opened marginally higher at 1,606.97 and moved between 1,606.53 and 1,616.03 throughout the day. Advancers thumped decliners 727 to 381 on the broader market, with 522 counters unchanged, 781 untraded and 10 suspended. Turnover advanced to 3.60 billion units valued at RM3.30 billion versus 3.32 billion units valued at RM3.30 billion on Tuesday.
Eurozone economic growth remains sluggish and dominated by downside risks, European Central Bank (ECB) President Christine Lagarde said during a parliamentary hearing on Wednesday. The bloc’s economy has been stagnant for 18 months, with the long-anticipated recovery yet to materialize.
Economic Outlook
Speaking to the European Parliament's Committee on Economic and Monetary Affairs in Brussels, Lagarde painted a cautious picture:
- Short-Term Growth: Likely to weaken further, driven by a slowdown in the services sector and continued contraction in manufacturing.
- Medium-Term Risks: Geopolitical tensions and rising trade barriers are elevating uncertainties, particularly for the bloc's trade-dependent economy.
"Survey-based data suggest that growth will be weaker in the short term," Lagarde said. "The medium-term economic outlook is uncertain, however, and dominated by downside risks."
Trade barriers, she noted, could hinder manufacturing and investment, compounding the challenges for the open eurozone economy.
Potential for Recovery
Despite the bleak near-term outlook, Lagarde highlighted possible drivers of recovery, including:
- Increased Investment: Spurred by targeted measures and infrastructure spending.
- Consumer Spending: Supported by rising real incomes.
Inflation Trends
Inflation, which remains slightly above the ECB’s 2% target, is projected to edge higher in the final quarter of 2024 before stabilizing at target levels next year.
While some policymakers worry that stagnant growth could lead inflation to drop below target, Lagarde reiterated the ECB’s cautious stance, emphasizing a data-dependent and meeting-by-meeting approach to policy decisions.
Next Steps for the ECB
The ECB is widely expected to cut interest rates by 25 basis points at its December 12 meeting, marking the fourth reduction this year. Lagarde did not provide explicit guidance on the upcoming decision, though her remarks did little to challenge market expectations.
Conclusion
As the eurozone grapples with stagnant growth and external pressures, Lagarde’s cautious remarks highlight the ECB’s delicate balancing act: fostering recovery while keeping inflation on track. The December meeting will likely provide further clues on how the bank plans to navigate these challenges.
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