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New Straits Times
a day ago
- Business
- New Straits Times
Trump's early Fed Chair move rattles markets, lifts Ringgit prospects
KUALA LUMPUR: The move by US President Donald Trump to possibly announce a new Federal Reserve (Fed) chairman early has shaken global markets and raised expectations of a weaker US dollar, boosting prospects for the ringgit. UOB Kay Hian Wealth Advisors Sdn Bhd's head of investment research Mohd Sedek Jantan said the possibility of a Fed chairman who favours faster rate cuts could place downward pressure on the US dollar, thereby supporting the ringgit. He added that the ringgit is trading now around 4.23 to the US dollar and is backed by Malaysia's strong macroeconomic fundamentals, including consistent inflows from government-linked institutions and a more liberal foreign exchange regime. "A stronger ringgit would increase Malaysia's import purchasing power and potentially draw more foreign capital into domestic bond and equity markets. "However, it could also challenge the price competitiveness of Malaysian exports, especially those still facing US tariffs, by making them more expensive in the American market. "In this environment, Bank Negara Malaysia's (BNM) flexible exchange rate framework will be instrumental in cushioning any adverse impact on export performance and maintaining external stability," he told Business Times. Mohd Sedek noted that Trump has been vocal in his criticism of current Fed chairman Jerome Powell, particularly over what he sees as delayed interest rate cuts. He said any new appointee is expected to align more closely with Trump's economic preferences, favouring earlier and more aggressive rate reductions to mitigate inflationary pressures stemming from his trade policies—especially reciprocal tariffs, currently paused until July 9. "These tariffs have played a role in the Fed's more cautious stance on policy easing. "I believe that the growing expectation of rate cuts by the Fed in the second half of 2025 (2H25) remains a key catalyst for global markets, including Malaysia," he said. On how it will affect stock market dynamics, Mohd Sedek said the outlook for global equities remains positive amid anticipated US rate cuts, as lower borrowing costs generally support investment and valuation growth. He said in the short term, global markets may increasingly reflect alignment with Trump's policy approach. He added that for Malaysia, this could translate into improved investor sentiment and greater capital flows. "However, the shadow of the 24 per cent reciprocal US tariffs on Malaysian exports despite their temporary suspension continues to weigh on confidence in export-dependent sectors. "That said, Malaysia remains actively engaged in negotiations with the US trade team. "While the outcome remains uncertain, we should remain optimistic that our delegation can secure more favourable terms potentially reducing the tariff to a level lower than the current 24 per cent. "A successful renegotiation would not only support Malaysia's export outlook but also help restore investor confidence," he said. Mohd Sedek also said that easing US monetary policy would likely enhance global liquidity and lower capital costs. This, he added, could fuel greater investment into technology and digital infrastructure worldwide, sustaining or even boosting demand for Malaysian semiconductor exports. "This positions Malaysia to ride on the upswing of global tech spending and maintain resilience in a complex trade environment," he noted. Similarly, Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said that the appointment of a more dovish chairman could lead to aggressive interest rate cuts, potentially weakening the US dollar and subsequently strengthening the ringgit. He noted that Trump has been persistent in calling for monetary easing by the Fed. However, he said this is a tall order, as the Fed is meant to operate independently in making monetary policy decisions. He added that Powell's term will expire in May next year, and any new chairman must be confirmed by the US Senate. "For now, this whole situation remains mere rhetoric, as there has been no official move or concrete indication that the Fed will bow to political pressure or that a nomination is imminent," he said. Nevertheless, Afzanizam noted that the US dollar has been relatively soft despite heightened economic uncertainties. He said this is rather unusual, as the dollar would normally appreciate when there are concerns over geopolitical risks and economic shocks. "Thus far, emerging market currencies including ringgit have performed well. "I suppose such a trajectory may continue should the rates cut more than expected by the markets," he said. On June 25, The Wall Street Journal reported that Trump is considering naming a successor to Powell well ahead of the end of Powell's term. This would mark a significant break from tradition and could give the administration an opportunity to influence investor expectations surrounding monetary policy. According to the report, Trump has discussed making the announcement as early as September or October, with some aides suggesting an even earlier timeline. Two people close to the administration said Trump has narrowed the field to three or four candidates and may reveal his choice soon. The Wall Street Journal noted that Trump's frustration with the Fed's cautious approach to interest rate cuts is prompting this unconventional move. His strategy appears to reflect a broader desire to appoint a Fed chairman who supports his pro-growth agenda. Following the report, the US dollar fell to a three-year low. Trump has repeatedly clashed with Powell, most recently calling him "very dumb" on Tuesday, as he continues to criticise the central bank for being too slow in cutting interest rates. Powell's term as chairman is due to run for another 11 months, until next May, and the announcement of a successor traditionally comes three or four months in advance.
New Straits Times
3 days ago
- Business
- New Straits Times
Bursa Malaysia extends gains on improved US political outlook
KUALA LUMPUR: Bursa Malaysia continued its upward momentum, supported by improved market sentiment amid growing optimism over political developments in the United States. At 5pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) ended 0.55 per cent higher, rising 8.37 points to finish at 1,528.16, compared to its previous close of 1,519.79. The broader market also saw a positive tone, with 509 gainers outpacing 406 losers, while 495 counters remained unchanged. UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research Mohd Sedek Jantan aid cyclical sectors on Bursa Malaysia, especially financial, industrial, and consumer-related counters are making a strong rebound. "These sectors, which tend to benefit from lower interest rates and improved economic sentiment, responded positively to the increased likelihood of a more accommodative US monetary policy stance," he said. He noted that the shifting outlook in the United States could offer Malaysia a twofold advantage, boosting investor confidence and attracting increased capital inflows. "A weaker US dollar and dovish Fed would support the ringgit, enhance import purchasing power, and draw foreign investors back into Malaysian equities and bonds. However, challenges remain. "The looming threat of the 24 per cent reciprocal US tariff on Malaysian exports, though temporarily suspended, continues to weigh on export-driven sectors," he said.
New Straits Times
4 days ago
- Business
- New Straits Times
Bursa Malaysia ends firmer after clearer US policy, easing geopolitical concerns
KUALA LUMPUR: Bursa Malaysia closed higher, lifted by renewed optimism driven by clearer US monetary policy signals, easing geopolitical concerns and selective foreign fund inflows. At 5pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) closed 0.36 per cent or 5.5 points higher at 1,519.79 from Tuesday's close of 1,514.29. The benchmark index opened 4.38 points firmer at 1,518.67. The broader market was positive with gainers outpacing losers 577 to 389, while 580 counters were unchanged, 972 untraded and 41 suspended. Turnover stood at 3.1 billion units worth RM2.27 billion compared with Tuesday's 2.53 billion units valued at RM2.04 billion. UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research Mohd Sedek Jantan said the FBM KLCI extended yesterday's gains and putting the index on course for a strong weekly performance. Although the index dipped slightly after the lunch break, he said it remained in positive territory, marking one of the more constructive trading sessions over the past fortnight, with renewed optimism lifting both sentiment and sectoral breadth. "Importantly, trading volume today rose to 3.15 billion shares, signalling a return of broader market participation. "This level of activity, combined with sectoral breadth, suggests improving investor engagement following weeks of cautious trading," he added. Sedek said the clarity from US Federal Reserve is the key driver behind today's positive market response after its chair Jerome Powell confirmed that interest rate cuts are effectively off the table until at least September. "With a clearer outlook for monetary easing later in the year, sentiment has improved across equities generally and particularly in sectors sensitive to borrowing costs and long-duration valuations. "The FBM KLCI's strength today reflects this repricing, with both blue-chip counters and broader sectoral indices responding favourably," he added. Sedek said today's rebound reflects a confluence of supportive factors, namely clearer Fed communication, easing geopolitical tensions, renewed foreign inflows, broad-based sector participation and a notable pickup in trading activity, with volume reaching 3.15 billion shares. "While we maintain a cautiously constructive outlook, we continue to expect volatility to remain a defining feature of the market in the months ahead," he said.
New Straits Times
5 days ago
- Business
- New Straits Times
Bursa Malaysia ends lower amid rising Iran-Israel conflict
KUALA LUMPUR: Bursa Malaysia ended the day in negative territory as investors turned cautious amid escalating Iran-Israel tensions following US strikes on Iranian nuclear facilities. At 5pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) edged down 0.15 per cent, falling 2.32 points to close at 1,514.29, compared to 1,516.61 on Monday. Despite the dip in the benchmark index, the broader market was upbeat, with 630 gainers outpacing 343 losers, while 465 counters remained unchanged. UOB Kay Hian Wealth Advisors Sdn Bhd's head of investment research Mohd Sedek Jantan said the index dropped to 1,511.29 during early trade but later trimmed some of its losses in the afternoon session, helped by a tentative ceasefire announcement from US President Donald Trump that provided a temporary boost to regional sentiment. "However, gains were later trimmed after Israel vowed to retaliate against an Iranian missile strike, keeping risk appetite in check. "While Trump's remarks brought temporary relief, no official response has been issued by Tehran, highlighting the importance for investors to remain calm during conflicts between nations, particularly when information remains one-sided or inconclusive," he said. Sedek noted that oil prices recovered some of their earlier losses, which helped support defensive plays in energy-related stocks, while a rebound in the tech sector signaled a quick shift back toward growth-oriented counters. "Financials led the gainers in today's trade, emerging as the preferred picks among investors amid continued uncertainty. "Retail trade and consumer-related stocks posted modest gains, despite inflation data released today showing encouraging signs of improvement," he added.
New Straits Times
6 days ago
- Business
- New Straits Times
Bursa Malaysia rebounds to close at day's high on bargain hunting
KUALA LUMPUR: Bursa Malaysia reversed its morning losses to close higher, supported by bargain hunting and sustained local investor interest. At 5pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 13.87 points, or 0.92 per cent, to 1,516.61 from Friday's close of 1,502.74. The index opened 9.55 points lower at 1,493.19 and fell as low as 1,488.89 in the morning session before trending up to close at its intraday high. The broader market, however, was negative, with losers outpacing gainers 697 to 274, while 490 counters were unchanged, 932 untraded and 41 suspended. Turnover surged to 3.09 billion units worth RM1.91 billion against 2.6 billion units worth RM3.37 billion on Friday. UOB Kay Hian Wealth Advisors Sdn Bhd investment research head Mohd Sedek Jantan said the FBM KLCI recovered from an early dip below a key psychological level as markets reacted impulsively to the United States' strikes on three Iranian nuclear facilities over the weekend. He noted that while the initial sell-off reflected heightened geopolitical anxiety, the index rebounded strongly, supported by bargain hunting and sustained local investor interest. "Historically, markets tend to absorb such shocks relatively quickly, with the direct impact of geopolitical risks often proving short-lived," he told Business Times. Sedek added that the ongoing Iran-Israel conflict has led to a spike in global oil prices, but the immediate pass-through to domestic inflation remains limited. Meanwhile, he said, export-oriented stocks may derive temporary support from a strengthening ringgit, as currency appreciation can lower import costs and reflect greater investor confidence. "However, this advantage may be offset if global demand slows or trade orders are delayed—developments that could weigh on revenue visibility and corporate earnings in the coming quarters," he said. Even though the ringgit was slightly weaker today, Sedek said the exchange rate is still considered stronger compared to last year's average.
