KUALA LUMPUR, Jan 23 (Bernama) -- Bursa Malaysia’s benchmark index recouped earlier losses to settle higher, maintaining a more than six-year high, buoyed by continued buying interest in technology stocks, while the strengthening of the ringgit against the US dollar further lifted investor sentiment. At 2.27 pm today, the local currency strengthened to 3.9992 versus the greenback, its strongest level in more than seven years. It was last seen at this level on June 18, 2018, at 3.9960/9990. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 2.85 points or 0.17 per cent to 1,719.99 from yesterday’s close of 1,717.14. The index surpassed its previous peak of 1,719.00 recorded on Feb 26, 2019. The barometer index opened 1.30 points lower at 1,715.84 and moved between an intraday low of 1,711.89 in early trade and a high of 1,723.41 in late afternoon before slipping slightly toward the close. However, market breadth was negative with decl...
Escalating tensions between the US and Europe — driven by President Donald Trump’s Greenland demands and renewed tariff threats — are raising concerns over the broader economic impact on the US, beyond near-term trade disruption.
Immediate Impact: Tariffs as a Growth Drag
Economists expect a full trade war to slow US growth rather than trigger a recession, but risks are rising as tariffs add to cost pressures.
Higher import costs for US businesses and consumers
Upward pressure on inflation, complicating policy easing
Additional strain on an already weak manufacturing sector
Why Europe Matters to the US Economy
The trans-Atlantic relationship is one of the deepest globally:
EU is the largest US trading partner
Europe is the largest foreign investor in the US (US$3.6tr FDI)
European investors hold about US$8tr in US stocks and bonds
A deterioration in ties risks lower exports, weaker profits and reduced capital inflows.
Services & Tech: Key Exposure
While goods trade growth has slowed, US services exports to Europe remain strong, totaling about US$295bn in 2024.
Financial, legal and insurance services
Cloud computing and digital services
Major beneficiaries include Microsoft, Amazon, Google and Apple, all of which derive a meaningful share of revenue from Europe.
Manufacturing & Supply Chain Risks
US manufacturing is vulnerable due to tight integration with Europe:
Reliance on European machinery and components
Higher input costs if tariffs escalate
Retaliation could hurt US exporters
Automotive hubs such as Spartanburg, South Carolina, where BMW operates a major plant, are among the most exposed.
Capital Flows: The Bigger Tail Risk
Analysts warn the most severe scenario would involve Europe targeting capital and services, rather than goods:
Reduced European investment into US assets
Weaker USD and higher US borrowing costs
Pressure on equity valuations, especially tech
Such measures would have far greater market impact than tariffs alone.
Market View
Markets remain relatively calm, expecting negotiations to prevail
US Treasuries still viewed as the global safe haven
Risks skew medium- to long-term, rather than immediate
Investor Takeaway
Tariffs = short-term noise and cost pressure
Services trade and capital flows = real structural risk
Prolonged US–Europe rift could weigh on US growth, profits and valuations
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