Investors likely to be cautious ahead of Fed and BNM’s interest rate hikes

Interest-rate jitters are set to induce fresh anxiety in the local equities market and weigh on risk sentiment next week as investors await the outcome of the Federal Open Market Committee and Bank Negara Malaysia’s (BNM) November meetings.

The US Federal Reserve is widely expected to raise interest rate by 75 basis points, and at home another 25 basis point hike is likely.

Both decisions will be made just one day apart. BNM meeting is scheduled on Nov 2-3.

Hong Leong Investment Bank predicts the FBM KLCI to trade in range-bound mode ahead of the outcome after the recent relief rebound from a two-year low of 1,373.

“Profit-taking may cap gains near 1,468 and 1,480 levels while the 1,500-1,518 territory will act as more formidable hurdles.

“With capital preservation as the key, we continue to advocate investors to seek refuge in banks, telcos, utilities, consumer, healthcare and construction sectors, in anticipation that the new government post-general election will continue to be highly supportive of domestic consumption,” it said.

Conversely, Rakuten Trade Sdn Bhd vice-president of equity research Thong Pak Leng believes the current valuation may attract interest from investors.

“This is positive for the domestic market,” he told Bernama.

On Friday, the FBM KLCI retreated from the 1,450-level breached two days earlier as further profit-taking set in across the broader market.

The local bourse’s lacklustre trading mirrored the weak regional markets’ performance as investors digested the European Central Bank and Bank of Japan’s interest rates announcements.

On a Friday-to-Friday basis, the FBM KLCI rose 0.89 of-a-point to 1,447.31 from 1,446.42 a week earlier. 

On the index board, the FBM Emas Index added 54.50 points to 10,275.40, the FBM 70 surged 207.94 points to 12,236.57 and the FBMT 100 Index rose 44.39 points to 10,014.85. 

The FBM Emas Shariah Index widened 125.11 points to 10,322.51 and the FBM ACE went up 80.03 points to 4,881.30. 

Sector-wise, the Financial Services Index contracted 125.04 points to 16,386.04, the Industrial Products and Services Index lost 0.31 of-a-point to 175.45, the Plantation Index garnered 35.78 points to 6,843.05 and the Energy Index gained 18.02 points to 697.57. 

During the trading week, weekly turnover decreased to 9.78 billion units worth RM8.08 billion from 11.36 billion units worth RM9.03 billion in the previous week.

The Main Market volume was lower at 5.87 billion shares valued at RM5.77 billion against last week’s 7.24 billion shares valued at RM7.85 billion. 

Warrant volume narrowed to 1.36 billion units worth RM231.45 million from 1.41 billion units worth RM232.65 million previously.

The ACE Market volume depreciated to 2.55 billion shares valued at RM1.08 billion from 2.71 billion shares valued at RM942.67 million. 

The market was closed on Monday for Deepavali. – BERNAMA