KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
Key Takeaway
Investors see a September Fed rate cut as a done deal after the weak jobs report, but this week’s CPI inflation reading could reshape expectations for future cuts. Services inflation is the wild card that could keep the Fed cautious.
Why the Market Expects a Cut
August jobs report showed just 22,000 new jobs, with earlier months revised lower.
Traders now price in a 100% chance of a cut at the Fed’s Sept. 17 meeting, with an 11% chance of a bigger 50bps move (CME FedWatch).
Fed Chair Jerome Powell already signaled in Jackson Hole that the Fed’s focus has shifted toward a weakening labor market.
The Data to Watch
CPI (Thurs): Expected to rise 0.3% MoM, 2.9% YoY (vs. 2.7% in July).
Core CPI: Seen steady at 3.1% YoY. Economists warn “sticky” services inflation could complicate rate-cut plans.
PPI (Wed): May show how tariffs are filtering into producer costs.
Jobs Revisions (Tues): Could reveal up to 1 million fewer jobs added from Apr 2024–Mar 2025.
Why Inflation Still Matters
Even with jobs slowing, tariffs remain a risk:
Economists warn if tariff passthrough rises from 20% to 50%, PCE inflation could move above 3% (vs. Fed’s 2% target).
Persistent monthly CPI gains of 0.3% would add pressure on consumers and businesses, challenging the Fed’s easing path.
Market Impact So Far
Equities: S&P 500 closed last week at a record before pulling back Friday (-0.3%). Nasdaq +1.1% for the week; Dow -0.3%.
Bonds: Treasury yields fell to multi-month lows after weak jobs data.
Dollar: Sank on expectations of easier policy.
Investor Takeaway
For now, markets are leaning into a “bad news is good news” dynamic: weaker jobs = more cuts = stock support. But the CPI report is the make-or-break moment.
If services inflation proves sticky, the Fed may slow its easing path — limiting upside for equities. If CPI comes in soft, expect rate-cut bets to pile on and stocks to push higher.
👉 Investors should keep a close eye on Thursday’s CPI release. It could be the catalyst for the next big market movein equities, bonds, and the dollar.
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