Uncertainties in US strike markets worldwide, Malaysia’s economy buoyed by strong fundamentals

THE FBM KLCI lost nearly 60 points due to rattling fears of rate hikes from US’ central bank, caused by inflationary pressure recorded last week.

Investors were worried that the rising inflation in US could lift interest rates and spoil the current rosy global economic growth outlook. US stock and futures extended the overnight losses, causing Asia’s markets to tumble almost three per cent.

The market anticipated this correction since the current bull market had started from March 2009. After losing nearly 60 points in two days, FMB KLCI opened higher by 15 points and showed an optimistic sentiment after the rebound on Wall Street on Monday.

The rebound gave investors a sigh of relief after sharp falls recorded across the western markets for the past few weeks. We have seen the recovery in the local bourse with majority of the local blue-chip companies gaining ground.

The ringgit fell against the US dollar and dropped to a two- week low after the Dow Jones’ nightmare, down 0.41 per cent from 3.88 to 3.9392. Compared to the Singapore dollar, the ringgit declined to 2.9783 starting from mid of February.

Oil prices fell for the sixth straight session from US$66 to US$59 start from the beginning of February after the Energy Information Administration (EIA) reported that US would likely to produce more than demand in 2018.

Investors cautioned that OPEC’s efforts to get rid of excess oil and gas supply in the market might be damped by rising production in US. In the week and month ahead, investors should advocate a more cautious approach as volatility of the market will heighten in the coming weeks.

The coming 14th Election might also bring the erratic ups and downs, and the market is heading towards uncertainties. Correction should be well expected in the first half of the year after the elections and local market embrace the volatility.

However, a clear investment direction will be anticipated after election.

Overall, Malaysia’s market is still be driven by strong fundamentals which are well supported by its economic performance.

Investors should look for a clearer opportunity to lock in some gains or take more advantages in repositioning at a cheaper entry level. Resistance of the KLCI is seen at 1,845 and a support is seen at 1,800.