KUALA LUMPUR, Dec 16 (Bernama) -- Bursa Malaysia extended its positive performance, closing higher for a fourth consecutive session, supported by improving local market sentiment underpinned by a firm domestic macroeconomic backdrop. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.59 points, or 0.28 per cent, to 1,648.31, from Monday’s close of 1,643.72. The index had opened 0.95 of a point lower at 1,642.77, and moved between 1,636.50 and 1,648.71 throughout the trading session However, on the broader market, decliners beat gainers 699 versus 408. A further 520 counters were unchanged, 1,149 untraded and 12 suspended. Turnover rose to 2.59 billion units worth RM2.27 billion from 2.50 billion units worth RM2.16 billion on Monday.
Key Takeaway: Wall Street rallied on expectations the Federal Reserve will begin cutting rates this month, with optimism growing that policy easing could extend the economic cycle without triggering recession.
Market Recap
S&P 500 rebounded after last week’s weak jobs report, closing near all-time highs at 6,495.15.
Treasuries extended gains, with the 2-year yield at its lowest since 2022.
The US dollar weakened, adding support to risk assets.
“It will likely take a major upside surprise from this week’s inflation data to derail a Fed cut next week,” said Chris Larkin, E*Trade at Morgan Stanley.
Fed Expectations
Markets now price in nearly three cuts by year-end, starting in September.
Traders assign an 89% probability to a 25 bp cut, with some betting on larger moves.
Thursday’s core CPI report (expected +0.3% MoM) will be pivotal ahead of the Sept 17 Fed meeting.
Analysts highlight risk of a ‘hawkish cut’ if inflation proves sticky.
Equities & Historical Context
S&P 500 has historically gained 20% during non-recessionary rate-cutting cycles.
Deutsche Bank notes the median S&P 500 rise is 50% in the two years following such cycles.
September, typically weak (-1% average since 1971), has shown gains when cuts occur in a non-recessionary backdrop.
Strategist Views
Nationwide (Hackett): Fed easing supports a soft landing; payroll weakness not recessionary.
UBS (Haefele): Sees up to 100 bp of cuts from Sept–Jan, recommends high-quality fixed income for yield lock-in.
Deutsche Bank (Reid): Equities are welcoming rate cuts, recession probabilities remain low.
JPMorgan (Tyler): Warns of possible “Sell the News” event post-cut.
Goldman Sachs: Expects rally to broaden, with small caps catching up.
DoubleLine (Campbell): Predicts steeper yield curve, weaker USD, and risk-taking in credit markets.
Outlook
The Fed appears set to pivot into an easing cycle as job market softness offsets tariff-driven inflation risks. Markets are betting aggressive cuts could extend the bull run, though inflation surprises or policy missteps could quickly shift sentiment.
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