Cautious Sentiment Weighs on Markets as Weak US Jobs Data Spurs Fed Cut Bets

The FBM KLCI ended marginally lower on Thursday, slipping 0.02% to 1,578.2, after Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 2.75% with a broadly neutral tone. Market breadth was negative, with 545 losers outpacing 392 gainers, while Healthcare (-1.6%) and Energy (-0.8%) led sectoral declines. Finance (+0.2%) and Telecommunications & Media (+0.1%) managed modest gains.

Globally, Wall Street retreated from record highs as weaker-than-expected U.S. jobs data dampened sentiment. Nonfarm payrolls rose just 22,000 in August, far below expectations of 75,000, intensifying concerns over slowing economic momentum. Traders have fully priced in a 25-basis-point Federal Reserve rate cut in September, with some anticipating a deeper 50-bp reduction. European equities also slipped, pressured by political uncertainty in France, while Asian markets gained on expectations of steeper U.S. rate cuts.

Cautious Sentiment

Looking ahead, analysts expect cautious sentiment to persist in Malaysia, mirroring Wall Street’s volatility. The U.S. inflation print for August, due Thursday, is seen as pivotal for Fed policy direction. Domestically, trading is expected to remain range-bound absent fresh catalysts, though prospects of deeper Fed cuts could bolster the ringgit and attract foreign inflows.

Sector-wise, market strategists maintain a constructive view on domestic construction, utilities, and renewable energy counters, citing structural support from data centre expansion, power reforms, and the ongoing energy transition. Technical indicators suggest resistance at 1,610 and support at 1,550 for the FBM KLCI.

Business News