Friday 29 Mar 2024
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KUALA LUMPUR (Dec 4): Malaysian shares and the ringgit may take the cue from overnight crude oil gains and US share losses as investors anticipate the first US interest rate hike in about seven years from near-zero levels.

US policy makers will meet this Dec 15 and 16 to decide on the country's monetary policy. A US rate hike does not bode well for emerging Asian markets like Malaysia as investors turn their attention to US dollar-denominated assets.

Yesterday, Malaysia's FBM KLCI fell 2.85 points to close at 1,673.92. The ringgit strengthened to 4.2253.

Overnight in the US, the Dow Jones Industrial Average declined 1.42%, S&P 500 fell 1.44% while Nasdaq Composite was 1.67% lower.

Brent crude oil rose US$1.35 or 3.2% to US$43.84 a barrel while US oil climbed US$1.14 or 2.9% to US$41.08. The ringgit's strength hinges on prices of crude oil, which forms a crucial portion of the Malaysian economy and government revenue.

Reuters reported that crude prices settled up about 3% on Thursday, the eve of an Organization of the Petroleum Exporting Countries (OPEC) meeting, as traders who expect no cuts in the group's output hedged their positions in case of a surprise outcome at a meeting of the world's largest oil producers.

The S&P 500 suffered its biggest drop since late September on Thursday as the European Central Bank (ECB) disappointed market hopes for greater stimulus.

The ECB cut its deposit rate deeper into negative territory and extended its asset buys by six months, as expected. But some market participants had hoped for greater stimulus.

 

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