Rakuten Trade’s Lau said it appears the markets are on a risk-on mode now and the rally could sustain moving forward.
PETALING JAYA: The prospects of an easing in monetary policy by the US Federal Reserve (Fed) have provided a boost to the FBM KLCI and broader markets in Asia.
The benchmark index ended 5.62 points or 0.37% higher to 1,541.41 yesterday, with gains being led by Axiata Group Bhd
, CIMB Group Holdings Bhd and AMMB Holdings Bhd. This followed two consecutive days of decline prior to the announcement by the Fed that it was maintaining its projection for three rate cuts this year which provided some support to market sentiment.
The Fed said that despite the recent high inflation readings in the United States, it remained on track for three interest rate cuts this year.
The Fed also reportedly said the timing of the reductions would depend on its officials becoming more secure that inflation would continue to decline to its 2% target even as the economy continues to outperform expectations.
Rakuten Trade’s head of equity sales Vincent Lau said it appeared that the markets were on a risk-on mode now and the rally could sustain moving forward .
“The Bank of Japan has increased its interest rates which ended an era of negative rates but its markets had gone up as well. It is a sign that markets are resilient,” Lau told StarBiz.
“Thursday’s trading on the Malaysian markets were broad-based, and the potential investments from overseas foreign direct investments are good as well.
“We are hopeful things will look up from here. Some sectors to look out for are construction and Johor-related plays. There could be a more broad-based rally coming soon based on the trading patterns,” he added. SPI Asset Management managing partner Stephen Innes said the uneventful Federal Open Market Committee meeting could help boost sentiment to the markets generally due to its commitment to gradual interest rate cuts.
“As the Group of Seven inflation optics have supported the disinflation process after Britain and Canada reported data below forecasts for February, indicating that the stickiness observed in equivalent US price (inflation) readings this year may not be as widespread as feared,” he said.
