Bursa slides after US Fed rate increase

KUALA LUMPUR: The correction on Wall Street overnight spilt over to regional markets including Bursa Malaysia, as the US Federal Reserve dashed hopes it would begin cutting interest rates later this year.

The Fed yesterday announced an increase in its benchmark lending rate by 25 basis points as expected and signalled yet another hike at its next meeting that will bring it to a projected terminal rate of of 5%-5.25%.

Disappointing investors however was Fed chair Jerome Powell's indication that the central bank was likely to pause at the terminal rate in 2023 while inflation rates undergo a long normalisation process.

"We expect to see another broad-based selldown, especially in the technology sector following the slump in Wall Street overnight.

"Investors may brace for more volatility and are likely to choose to expose further in the defensive nature sectors such as consumer, telco and utilities," said Malacca Securities Research in a note.

At the opening bell, the FBM KLCI was down 5.07 points to 1,406.97.

Despite a 1.6% slump on the US Nasdaq however, Bursa Malaysia's technology index seemed to be holding relatively stable, falling only a fraction of a point at the open.

Some laggards included MPI down 20 sen to RM28.80, Dagang Nexchange sliding one sen to 56 sen and MI Technovation falling one sen to RM1.87.

On the FBM KLCI, bank stocks were once again subdued with Maybank dropping four sen to RM8.51, Public Bank sliding five sen to RM3.95, CIMB shedding one sen to RM5.19 and Hong Leong Bank losing 10 sen to RM20.

PETRONAS Chemicals was also down five sen to RM6.74 while Maxis fell five sen to RM3.96.

On the actives list, Hong Seng was flat at 13.5 sen, Jade Marvel was flat at 31 sen and Sapura Energy unchanged 4.5 sen.

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