KUALA LUMPUR, March 28 (Bernama) -- Bursa Malaysia closed lower today on profit-taking after a strong three-day rally, and investor sentiment was further shaken in the late afternoon session following news of an earthquake in Myanmar with tremors felt in neighbouring Thailand, said Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) slid 1.44 per cent or 22.08 points to 1,513.65, its intraday low, from Thursday’s close of 1,535.73. The benchmark index opened 4.16 points lower at 1,531.57 and hit an intraday high of 1,533.52 during the midday session. On the broader market, decliners outpaced gainers 563 to 395, while 408 counters were unchanged, 1,106 untraded, and 133 suspended. Turnover slipped to 2.25 billion units valued at RM2.13 billion from 2.52 billion units worth RM2.41 billion on Thursday.
Key Takeaways:
Rate Adjustments & AI Outlook: The Federal Reserve’s projected interest rate adjustments are likely to have a limited effect on equity markets in the short term. While some may fear that higher rates will constrain growth, the real driver of returns, particularly in the U.S., will be advancements in Artificial Intelligence (AI), which continues to be viewed as a powerful growth engine.
Tariffs and Economic Resilience: The biggest risk to the market is not a recession, but rather long-term decisions regarding infrastructure and fiscal policies that could reduce structural growth in the U.S. Even with rising tariffs, the economy has shown resilience, and the focus should be on how these decisions impact long-term growth rates, rather than short-term market dips.
China vs. U.S. in AI Development: Both the U.S. and China stand to benefit from the AI revolution, but the U.S. is seen as having a more favorable macro environment, making it the stronger contender for long-term AI leadership. AI is expected to be a major driver of returns in the tech sector, particularly in the U.S.
The Role of Tariffs in Economic Growth: While tariffs have been a contentious issue, the uncertainty around their impact on the U.S. economy is expected to lessen as the details become clearer. Over time, this will likely reduce the leverage they provide in negotiations, creating a convergence towards more stable policy positions.
Bonds and Inflation Concerns: Despite some optimism, the current fiscal environment and ongoing deficit concerns make Treasuries less attractive. The Federal Reserve’s current forecasts on inflation, particularly the assumption that tariff-driven inflation will be a one-off issue, are viewed as overly optimistic. Continued fiscal deficits may put upward pressure on yields, making bonds a less appealing investment option.
Conclusion: While a recession is not seen as the biggest threat, long-term policy decisions, particularly around infrastructure and fiscal measures, pose a greater risk to U.S. economic growth. Investors are advised to focus on the AI sector and remain cautious of bond market dynamics due to the ongoing fiscal challenges.
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