KUALA LUMPUR: Bursa Malaysia continued its downward trend to close lower today in tandem with global stock markets taking the lead from Wall Street's performance, as investors continued to fret over rising expectation for tighter monetary policy by the Federal Reserve following much stronger-than-expected ADP payroll data.
At 5pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) fell 8.28 points to 1,377.67 from 1,385.95 at Thursday's close.
The key index opened 3.75 points lower at 1,382.20 on Friday morning.
Tradeview Capital Fund Manager Neoh Jia Man said concern over further monetary tightening in the US will have major implications for the local market as well.
"With most economists anticipating no further rate hikes by Bank Negara Malaysia, the potential widening of interest rate differentials means the ringgit could come under further pressure relative to the US dollar. This, in turn, could accelerate capital outflows from Malaysia," she told the New Straits Times.
Malacca Securities head of research Loui Low said so far, there are very few leads in the markets and the uncertain Malaysia's state election outcome could be limiting the upside potential for now.
"Bargain hunting may return next week, but still the upside might be limited to around 1,400 levels and support level at 1,370," he said.
In the near term, Neoh anticipates that the performance of the FBM KLCI will continue to be lackluster, primarily due to the prevailing political uncertainties leading up to the state elections scheduled in August.
As a result, it is likely that the FBM KLCI will face challenges in breaking above the 1,400 level, she said.
However, it's worth noting that the current valuation of the market is near a decade-low. This relatively low valuation could provide some support and help limit the downside risks, said Neoh.
SPI Asset Management managing director Stephen Innes predicts that US Treasury yields are likely to increase further due to a robust US jobs report, which could initially have a negative impact on global stocks, including Malaysia's exchange stock market.
According to Innes, this shift in market conditions could occur in the coming week, leading to a broader increase in global stock markets including Malaysia's stock market.
"However, our local sentiment may still be hindered by China's weakening economic growth," he added.