Friday 29 Mar 2024
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KUALA LUMPUR (Aug 29): The FBM KLCI fell 1.49 points or 0.1%, tracking Asian share markets, after the US Federal Reserve (Fed) Chair Janet Yellen said it may raise its interest rate within this year.

US rate hikes do not bode well for emerging Asian markets in anticipation that investors will shift their money back to US dollar-denominated assets.

The Fed had previously raised its interest rate in December last year to between 0.25% and 0.5% from between 0% and 0.25%. That was the first increase since June 2006.

At 5pm today, the KLCI closed at 1,681.60 points. Across Asia, Hong Kong's Hang Seng and South Korea's Kospi declined 0.38% and 0.25% respectively.

Reuters, quoting Yellen, reported that the case for a US rate hike has strengthened in recent months, with a lot of new jobs being created, and economic growth looks likely to continue at a moderate pace.

She said this in a speech at the Fed's annual monetary policy conference in Jackson Hole, Wyoming, on Friday (Aug 26). While Yellen did not give guidance on what the central bank needs to see before raising rates, she said the Fed already thinks it is close to meeting its goals of maximum employment and stable prices. She described consumer spending as "solid" but noted that US business investment was weak and exports hurt by a strong dollar.

In Malaysia today, Areca Capital Sdn Bhd chief executive officer Danny Wong told theedgemarkets.com that the KLCI's decline was mainly due to uncertainty on the outlook of US interest rates.

"Last Friday, Yellen reiterated the US's intention to raise interest rates. This is not something new, but it indicates that the uncertainty surrounding US rates still continues.

"The KLCI will be probably range bound until there is more certainty in the external outlook. However, Malaysian corporate earnings have shown some stabilisation, so there is some hope there," Wong said.

Overall, Bursa Malaysia saw 1.49 billion shares worth RM1.43 billion exchanged. Decliners outnumbered gainers at 513 versus 314.

Leading decliner was British American Tobacco (M) Bhd while top gainer was Dutch Lady Milk Industries Bhd. The top-active stock was AirAsia X Bhd.

 

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