FX.co ★ Continued Consolidation Called For Malaysia Stock Market

The Malaysian stock market has experienced a downturn for three consecutive sessions, losing nearly 5 points, equating to a 0.3% decline. The Kuala Lumpur Composite Index currently hovers just above the 1,640-point mark, and there are indications of potential further depreciation on Thursday.

The prognosis for the Asian markets is predominantly negative, driven by escalating treasury yields and growing anxiety concerning interest rate forecasts. Echoing the downward trends seen in European and U.S. markets, Asian exchanges are expected to mirror this sentiment.

On Wednesday, the KLCI concluded with a modest decline, influenced by losses in the telecommunications sector despite gains in the financials sector, along with a mixed performance from plantation and industrial stocks.

On the day, the index saw a slight reduction of 1.01 points or 0.06%, closing at its daily low of 1,641.53, having peaked at 1,645.90 earlier. Among the active stocks, Axiata experienced a decline of 1.23%, Celcomdigi dropped 0.56%, while CIMB Group and Genting rose by 0.25% each. Genting Malaysia increased by 0.43%, Hong Leong Bank gained 0.85%, both IHH Healthcare and Tenaga Nasional decreased by 0.28%, and IOI Corporation fell 0.53%. Kuala Lumpur Kepong moved up 0.47%, while Maxis decreased by 1.05%. MISC advanced 0.26%, MRDIY surged 1.38%, PPB Group rose 0.42%, Press Metal fell sharply by 1.85%, and QL Resources decreased by 0.42%. Meanwhile, RHB Bank rallied, climbing 1.25%, Sime Darby dropped by 0.83%, SD Guthrie retreated 1.24%, and both Sunway and YTL Corporation saw increases of 0.45%. Telekom Malaysia slipped 0.61%, YTL Power climbed 1.18%, and Maybank, Public Bank, and Petronas Chemicals reported no change in their stock values.

From Wall Street, the outlook appears weak, with major indices opening lower on Wednesday and remaining submerged throughout the day, albeit recovering somewhat from session lows. The Dow Jones Industrial Average fell by 409.94 points or 0.96% to close at 42,514.95, while the NASDAQ declined by 296.47 points or 1.60% to 18,276.47, and the S&P 500 slipped 53.78 points or 0.92% to 5,797.42.

This weakness in the U.S. markets is largely attributed to a continued surge in treasury yields, which have climbed significantly in recent sessions. The yield on the ten-year benchmark note has hit its highest point in nearly three months due to concerns that the Federal Reserve might reduce interest rates more slowly than anticipated. Although the Fed is broadly expected to lower interest rates by a quarter-point in the upcoming month, there is mounting skepticism regarding a potential rate cut in December.

On the commodities front, oil prices fell on Wednesday, impacted by reports of a larger-than-expected increase in U.S. crude oil inventories from the previous week alongside a strengthening U.S. dollar. December futures for West Texas Intermediate crude oil decreased by $0.97 or 1.35%, settling at $70.77 a barrel.

On the domestic front, Malaysia is set to release September consumer price data later today. In August, inflation figures showed a 0.1% month-on-month increase and a 1.9% year-on-year rise.