KUALA LUMPUR, Dec 5 (Bernama) -- Bursa Malaysia closed lower on Friday amid mixed regional market performance as investors turned cautious over a possible rate hike by the Bank of Japan (BOJ) and upcoming US economic data that may influence the Federal Reserve’s (Fed) interest rate decision next week. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) pared most earlier losses to settle 4.55 points easier, or 0.28 per cent, to 1,616.52 from Thursday’s close of 1,621.07. The benchmark index, which opened 0.37 of-a-point lower at 1,620.70, moved between 1,609.67 and 1,621.25 throughout the day. The broader market was negative, with decliners outpacing advancers 604 to 439. A total of 550 counters were unchanged, 1,151 untraded, and 18 suspended. Turnover declined to 3.17 billion units worth RM2.24 billion from 4.48 billion units worth RM2.75 billion yesterday. Rakuten Trade Sdn Bhd vice-presiden...
Market Overview
The S&P 500 fell for a third consecutive session Thursday — its longest losing streak in a month — as valuation worries overshadowed strong U.S. economic data. The index slid 0.5%, while the Nasdaq Composite and Dow Jones Industrial Average also retreated. Short-dated Treasury yields climbed, the U.S. dollar strengthened, and Bitcoin extended losses ahead of a major options expiry.
Growth vs. Valuation Risks
Revised GDP data showed the U.S. economy expanded at a 3.8% annualized pace in Q2 — the fastest in nearly two years — while jobless claims fell to their lowest since July. Yet, investors focused on valuations:
The S&P 500 forward P/E ratio has climbed to 22.9, a level breached only during the dot-com bubble and the 2020 pandemic rally.
Chris Zaccarelli of Northlight Asset Management warned that much of the “good news” is already priced in, raising concerns about future downside risks.
Fed Policy in Focus
The Federal Reserve’s next moves remain the market’s biggest swing factor.
The Fed cut rates by 25 bps last week, its first reduction in 2025.
Policymakers remain split:
Stephen Miran (Governor): called for faster cuts to avert labor market damage.
Michelle Bowman (Governor): argued inflation is close enough to target to justify easing.
Austan Goolsbee (Chicago Fed): warned against “front-loading” multiple cuts amid tariff-driven inflation risks.
Lorie Logan (Dallas Fed): suggested moving away from the federal funds rate as the main policy benchmark.
Markets are currently pricing ~40 bps of cuts by year-end, down slightly after Thursday’s stronger data.
Investor Sentiment & Risks
Earnings Season Looms: Optimism is high, with CFO surveys showing improved confidence, but expectations may already be stretched.
Volatility Warning: Goldman Sachs notes October has historically seen 20% higher volatility than other months.
Shutdown Concerns: Growing risks of a U.S. government shutdown are adding to market unease.
AI Still a Driver: Barclays strategists say AI spending remains “on solid footing,” limiting downside risk to S&P 500 earnings.
Key Takeaways
Valuations are stretched, making markets more vulnerable to disappointments.
Economic data is strong, but may reinforce the Fed’s cautious pace of rate cuts rather than trigger aggressive easing.
Earnings and inflation reports will likely set the next market direction.
Investors should brace for short-term volatility, even if fundamentals remain broadly supportive heading into Q4.
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