Fed’s tone of imminent rate hike may affect mart

BURSA Malaysia is expected to remain bearish next week, in line with the global indexes, following the United States Federal Reserve’s comments on a possible interest rate rise soon.

Dark clouds hovered over the local and global stock markets after Donald Trump’s unexpected victory in the US presidential election ushered in market uncertainty.

The FTSE Bursa Malaysia KLCI (FBM KLCI) ended at 1,623.80 points yesterday, down 2.97 points from Thursday’s 1,626.77.

There were 402 losers and 356 gainers with 353 counters unchanged, 605 untraded and 16 others suspended.

FXTM vice-president for market research Jameel Ahmad said the probability of the Fed raising interest rates next month had reached levels near 90 per cent following repeated comments by Fed officials of its commitment to do so relatively soon.

“There are severe concerns for the emerging markets if Trump’s policies towards stimulating the US economy through infrastructure spending and other aspects of fiscal stimulus, such as tax cuts, would be successful.

“It will eventually lead to an accelerated cycle of future US interest rate rises from the Fed and this represents a heavy concern for capital outflows,” he said.

RAM Ratings expects the global environment to become more volatile following the recent surprise outcome of the US presidential election.

“In line with the higher likelihood of the new administration pursuing more UScentric policies, we expect some impact on global trade and investment flows,” it said.

VCB Capital chief executive officer Mohammad Amir Mokhtar has picked AirAsia Bhd as a stock to watch next week.

Amir said the stock, which came under five days of continuous selling pressure, reversed the losses yesterday to end 7.5 per cent higher to RM2.72.

“Volume traded was heavier at over 18.2 million shares compared with average daily trading volume of 9.7 million shares,” he said.