KUALA LUMPUR, June 18 (Bernama) -- Bursa Malaysia’s key index finished marginally higher, supported by strong buying interest in consumer-related counters, amid mixed performance across regional markets. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose by 1.40 points, or 0.08 per cent, to 1,711.39 from Tuesday's close of 1,709.99. The key index opened 12.36 points firmer at 1,722.35 and moved between 1,711.31 and 1,722.63 throughout the session. Market breadth was negative, with losers leading gainers 678 to 493, while 549 counters were unchanged, 1,016 untraded and 34 suspended. Turnover increased to 4.50 billion units worth RM3.45 billion from 3.93 billion units worth RM3.45 billion on Tuesday.
Asian equities faced downward pressure on Friday morning after US stocks dropped past a key milestone, sending major indices into correction territory. The S&P 500 fell 1.4% to a six-month low, marking a 10% correction, the third straight week of losses. Similarly, the Nasdaq 100 also slipped by 1.9%, while Treasuries saw a rally.
Key Market Movements:
- US stocks: The S&P 500’s correction led to a loss of $5 trillion from the benchmark's value, deepening losses in megacap tech stocks and junk bonds. An $8 billion ETF tracking junk bonds saw a significant loss, and Bitcoin also saw a dip before stabilizing in Asia.
- US tariffs: President Trump intensified his trade war rhetoric, threatening a 200% tariff on European wine and champagne. This was part of broader concerns over escalating trade tensions. Trump also confirmed that steel and aluminum tariffs would remain, with reciprocal tariffs on global trading partners set to take effect by April 2.
US Economic Concerns:
- Recession risks: Former Treasury Secretary Steven Mnuchin downplayed the risks of a US recession, suggesting that a 5-10% correction in major indices was expected. However, JPMorgan Chase & Co.strategists noted that credit markets are pricing in a recession risk much lower than equities, leaving room for a potential positive surprise.
- Recession signals: The Federal Reserve’s Treasury-based recession model indicated a 29.76% probability of a US recession over the next year, citing ongoing tariff uncertainties as a key factor.
Asian Market Outlook:
- Futures: Equity futures for Japan and Australia declined, while China provided a rare positive note, with Hong Kong equity futures rising over 1%.
- Commodities: Oil prices dropped, with West Texas Intermediate settling below $67 a barrel, a 1.7% decrease, while gold touched a record high as investors sought safe-haven assets amid rising trade tensions.
Inflation & Trade War Impact:
- Despite signs of a cooling inflation in the February CPI report, the escalating trade war between the U.S. and its allies—especially Europe and China—continued to weigh heavily on market sentiment. Investors are watching closely as tariff-induced inflation could derail efforts to stabilize prices.
What’s Next?
- As US stocks and global markets continue to face turbulence, the near-term outlook remains uncertain. Trade tensions, coupled with economic growth concerns, are creating a volatile investment environment. Investors may lean toward defensive sectors like gold and safe-haven assets, awaiting further clarity on US tariffs and the global economic impact.
Key Takeaways:
- Asian markets to face downward pressure as US stocks enter correction territory.
- Tariffs and trade wars intensify, with Trump threatening new duties on European goods.
- Recession risk rises in US markets, with ongoing uncertainty surrounding tariffs and economic growth.
- Commodities like oil and gold reflect market anxiety, with gold hitting record highs.
This ongoing period of market volatility highlights the deepening effects of the trade wars and global economic uncertainty.
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