FBM KLCI up 0.6% on potential trade deal, US rate cut bets

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KUALA LUMPUR (June 19): The FBM KLCI settled up 9.86 points or 0.6% at 1,662.62 during Bursa Malaysia's midday break today amid optimism on a potential US-China trade deal and anticipation of US interest rate cuts.

Anticipation of US interest rate cuts supported world stock market sentiment. Lower US interest rates bode well for Asian markets in anticipation that global fund managers will shift their money into higher-yielding Asian assets such as stocks, bonds and currencies.

Adding to the cheer, according to Reuters, was news US President Donald Trump would meet with Chinese President Xi Jinping at the G20 summit later this month, and that trade talks would restart after a recent lull.

It was reported that Asian shares hit five-week highs on Wednesday as investors hoped the Federal Reserve would follow the lead of the European Central Bank and open the door to future rate cuts at its policy meeting later in the day.

In Malaysia, TA Securities Holdings Bhd wrote in a note today: "The local market should extend range-bound trade with global growth concerns amid the US-China trade standoff and caution ahead of the US central bank policy meeting restricting participation."

Across Bursa today, 1.34 billion shares were traded for RM1.03 billion at 12:30pm.

The top gainer was Malaysia Airports Holdings Bhd while the most-active stock was Iskandar Waterfront City Bhd. The leading decliner was Hong Leong Bank Bhd.