Stagflation fears, US data to shape Bursa sentiment next week, say analysts

Malay Mail

4 hours ago

KUALA LUMPUR, June 21 — Bursa Malaysia is expected to remain cautious next week, tracking Wall Street's performance as markets digest signals from the United States (US) Federal Open Market Committee (FOMC), said an analyst.
UOB Kay Hian Wealth Advisors Sdn Bhd's head of investment research Mohd Sedek Jantan noted that the US Federal Reserve's (Fed) projections, characterised by slower growth, elevated inflation, and a higher unemployment trajectory for 2025–2027—suggest a stagflationary undertone, which could weigh on risk sentiment.
'Growth-sensitive sectors may face headwinds as the policy outlook remains uncertain. The split in the FOMC's dot plot, with members divided between no interest rates cuts and two cuts by year-end, implies limited near-term easing and reduces the likelihood of a July cut,' he told Bernama.
Mohd Sedek also pointed out that the benchmark index is hovering near the psychological threshold of 1,500 points, adding that a breach of this level could trigger opportunistic buying by institutional investors, especially as the index nears its immediate support at 1,490 points.
'While the FOMC's guidance has introduced caution, markets may find support at lower levels, where valuations become more compelling. Geopolitical-driven volatility is often short-lived, and we expect a moderation in risk sentiment as these concerns subside,' he said.
Meanwhile, Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng market focus next week will shift to several key economic indicators, including the US quarterly gross domestic product and jobless claims.
'The FBM KLCI is currently priced at about 12 times the calendar year 2025 price-to-earnings ratio, notably below its long-term average of over 16 times, indicating potential for further appreciation.
'The subdued valuation may attract bargain hunters. For the week ahead, we expect the index to trade within the 1,500–1,530 points range,' Thong added.
For the week just ended, Bursa Malaysia was mostly subdued as investors stayed on the sidelines due to ongoing concerns over the Middle East conflict and the anticipated implementation of reciprocal tariffs by US President Donald Trump.
On a Friday-to-Friday basis, the barometer index dropped 15.37 points to 1,502.74 from 1,518.11 a week earlier.
The FBM Emas Index fell 141.109 points to 11,228.99, the FBMT 100 Index was down 128.59 points to 11,015.45, and the FBM Emas Shariah Index declined 128.19 points to 11,201.34.
The FBM 70 Index decreased 250.96 points to 16,117.75 and the FBM ACE Index shrank 86.34 points to 4,400.85.
Across sectors, the Industrial Products and Services Index eased by 4.08 points to 147.27 and the Energy Index was 5.05 points lower at 735.71.
The Plantation Index slid 0.40 of-a-point to 7,220.52, the Healthcare Index dipped 85.83 points to 1,691.89, and the Financial Services Index tumbled 179.87 points to 17,468.38.
Turnover dropped to 13.72 billion units worth RM10.84 billion from 13.89 billion units valued at RM10.61 billion in the preceding week.
The Main Market volume fell to 6.29 billion units valued at RM9.63 billion against 6.42 billion units worth RM9.47 billion previously.
Warrants turnover expanded to 6.16 billion units worth RM845.61 million versus 5.97 billion units valued at RM687.92 million a week ago.
The ACE Market volume slipped to 1.25 billion units valued at RM361.21 million compared with 1.50 billion units worth RM458.75 million in the preceding week. — Bernama