KUALA LUMPUR, July 30 (Bernama) -- Bursa Malaysia's key index closed at an intraday high today, supported by continued buying interest even as renewed geopolitical tensions and a weaker overnight lead from Wall Street following the US Federal Reserve's (Fed) decision to stand pat on interest rates weighed on broader sentiment. The Fed has decided to hold rates steady for the fifth consecutive meeting, with the Federal Funds Rate unchanged between 3.50 per cent and 3.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.84 points to 1,720.40 from yesterday’s close of 1,715.56. The benchmark index, which opened 1.14 points lower at 1,714.42, hit its lowest level of 1,710.69 in early trade before gaining momentum for the rest of the day. However, the broader market was negative with losers outpacing gainers 581 to 411, while 612 counters were unchanged, 1,173 untraded, and 87 suspended. Turnover declined to 2.49 billion units valued at RM2.25 billion from ...
Despite President Donald Trump’s latest wave of tariffs — targeting US$3.2 trillion worth of imports — the S&P 500 remains close to record highs.
Tariff Shock? Not Really
Effective average tariff rate has jumped from 2.5% to 16% this year — a 6x increase, says UBS Chief Economist Jonathan Pingle.
This could reduce U.S. GDP by 0.7 percentage points over four quarters — or even 1% if tariffs jump to 21%.
Yet markets remain calm.
Why Investors Aren’t Panicking
Investors expect Trump’s “escalate to de-escalate” strategy — suggesting that most tariffs won’t stick.
UBS believes that extended deadlines offer room for last-minute trade deals.
An effective tariff ceiling around 18% is seen as manageable vs. a feared 21%.
Earnings Reflect the Tension
S&P 500 earnings growth forecasts have dropped to mid/high single digits, from mid-teens.
90% of S&P 500 companies referenced trade uncertainty in their Q1 calls.
Yet, AI and tech stocks have soared — up 50% from April lows — masking broader weakness.
Why Companies Stay Quiet on Tariffs
Only a third of S&P 500 firms openly discussed tariff impact in earnings calls.
Many avoid commenting due to public relations risks, especially if they plan to pass costs to consumers.
Firms are still working through pre-tariff inventories, offering a temporary cushion.
Consumer Strength May Buffer Impact
Despite inflation and trade noise, many consumers still have strong balance sheets, especially outside of lower-income groups.
Holiday spending is not expected to drop significantly due to this financial cushion.
UBS: Future Tariff Hikes = Less Shock Value
The initial surge (2.5% → 16%) caused more concern than future hikes (16% → 18% or 21%).
Many firms are already used to handling 15% swings in costs (e.g., oil, FX), and may manage tariffs similarly.
Where to Watch for Tariff Stress? Bonds, Not Stocks
UBS’s Kurt Reiman suggests bonds provide a better gauge of economic concern.
His hedge strategy:
Gold
5-year government bonds
High-quality corporate bonds
Unhedged foreign stocks
Bottom Line
The market seems confident that tariff hikes are temporary or negotiable — not a long-term drag. However, UBS analysts urge caution, reminding investors to hedge risks while the calm lasts.
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