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.
The Trump administration is preparing a sweeping tariff package that may mark the most aggressive protectionist turn in US history since the 1930s. Markets are watching closely as risks of recession, inflation, and global retaliation mount.
Policy Overview
President Trump is poised to unveil a new round of “reciprocal tariffs”, possibly as soon as Wednesday, which would target countries with trade barriers or tax structures deemed unfair to US exporters.
Tariffs could raise average US import duties by up to 28 percentage points — the most since the 1800s.
The plan would replace the US’s long-held multilateral trade commitments under GATT/WTO with bilateral arrangements.
Key trading partners including Europe, China, Canada, and Southeast Asia are expected to be affected.
Economic Impact Forecasts
Bloomberg Economics projects a 4% hit to US GDP over 2–3 years under a maximalist scenario—more than $1 trillion in output lost.
Consumer prices could rise 2.5%, compounding existing inflation pressures.
Investment confidence is deteriorating, with bookings at logistics firms already down significantly.
Market and Policy Response
US equities underperformed in Q1, with the S&P 500 entering correction territory.
ECB President Christine Lagarde has warned EU leaders to prepare for a “worst-case” trade scenario.
The Fed cut its 2025 US growth forecast from 2.1% to 1.7% even before the tariffs were confirmed.
OECD and Moody’s now place the US back on recession watch.
Business Sentiment Split
Steelmakers and some US brands support the plan, citing unfair competition.
Multinationals and retailers (e.g., Tesla, JM Smucker, DataDocks) are warning of cost escalation, supply chain disruptions, and retaliation risk.
Consumer sentiment has fallen to its lowest in over two years.
Strategic Context
Trump’s strategy mirrors the 1930 Smoot-Hawley tariffs, which deepened the Great Depression.
The proposed tariffs aim to offset revenue losses from planned tax cuts, while reshaping US trade relationships.
Officials claim tariffs will attract $2T in investment and raise $700B in revenue, but long-term effectiveness is debated.
Key Takeaways
Tariff escalation could trigger a global slowdown and introduce volatility across supply chains, FX, equities, and commodities.
US companies face higher input costs, rising consumer backlash abroad, and investment delays at home.
Reversal of decades of multilateralism marks a turning point in global trade governance.
Markets should prepare for higher uncertainty, slower growth, and potential retaliation-led stagflationary pressures.
Comments
Post a Comment