Bursa nearly flat at opening, ringgit extends downward trend against US dollar

KUALA LUMPUR – Bursa Malaysia was almost flat at the opening today as traders were cautious amid the weaker Wall Street performance, analysts said.

The benchmark index opened 4.02 points better at 1,455.50 from yesterday’s close of 1,451.48, but retracted to 1,452.43 at 9.05am. 

On the broader market, losers outpaced gainers 119 to 97, while 177 counters were unchanged, 1,889 untraded and 65 others suspended.

Turnover stood at 93.22 million units worth RM50.15 million.

Rakuten Trade Sdn Bhd vice-president of equity research, Thong Pak Leng, said major indices on Wall Street struggled to make a significant rebound, with sentiments remaining jittery due to recession fears.

The Dow Jones Industrial Average added 82.32 points, S&P 500 eased by 2.72 points and the Nasdaq Composite fell by 3.65 points, while the United States (US) Treasury 10-year yield edged lower to 3.09%. 

Back home, he said that trading on the local bourse is expected to stay wary today due to the lack of catalysts.

“As such, we expect the key index to move within the 1,440-1,460 range,” Thong said.

He noted that the crude palm oil price had eased to RM5,080/tonne due to weaker exports data, and Brent crude also ended lower at US$116 (RM510.7) per barrel on news that the US may release more oil from its stockpile.

Among the heavyweights, Hartalega and Sime Darby Plantation rose 8 sen each to RM3.03 and RM4.41, respectively, Hong Leong Financial Group added 3 sen to RM18.90, MRDIY eased 2 sen to RM2.03, Top Glove shed 1 sen to RM1.11, Maybank declined 7 sen to RM8.58 and Telekom Malaysia fell 7 sen to RM5.20. 

Of the actives, Cypark weakened 3 sen to 35 sen, Reach Energy was flat at 5.5 sen, MN Holdings slid 1 sen to 22 sen and Dagang Nexchange eased 0.5 sen to 78.5 sen.

On the index board, FBM Emas Index rose by 5.99 points to 10,355.66, FBM Emas Shariah Index improved 17.55 points to 10,556.80, FBM 70 was 5.46 points higher at 12,508.53, FBM ACE contracted 17.49 points to 4,822.60, and FBMT 100 Index perked 6.09 points to 10,093.98.

Sector-wise, the Financial Services Index shed 20.29 points to 16,042.58, while the Plantation Index was up 46.67 points to 7,017.31, and the Industrial Products and Services Index was 0.83 of-a-point stronger at 182.11.

Meanwhile, the ringgit extended its downtrend against the US dollar this morning due to the stronger US dollar Index (DXY), as the United States Federal Reserve chair Jerome Powell reiterated his stance to keep raising interest rates in a bid to quell the rising inflation, an analyst said.

At 9am, the local currency depreciated to 4.4020/4045 against the greenback from 4.3980/4010 at the close yesterday.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the DXY settled higher last night at 105.104 points.

He said during the European Central Bank panel session, Powell indicated that the US economy is in strong shape and is well-positioned to withstand the impact from the tighter monetary policy.  

“As such, the ringgit should continue to linger around RM4.40 level against the US dollar,” he said. 

Additionally, he said sentiments are expected to remain wary as recession fears are building up in the US.

“This is due to the close correlation between the US’ and Malaysia’s gross domestic product. Therefore, any hiccups in the US growth could be transmitted to Malaysia,” he added. 

Commenting on an article which stated that the surging US dollar has set Asian currencies on course for their worst quarter since 1997, Afzanizam said the country needs to prepare for any eventualities.  

“We are looking at an environment where volatility has become more extreme. The worst level ever achieved for the dollar-ringgit pair was RM4.7125 on January 9, 1998. Will it revisit such a level again? Only time will tell,” he said. 

According to the article, most emerging Asian currencies had declined yesterday, led by the South Korean won as investors sought the safety of the US dollar due to rising concerns of a recession in the US.

It said the Bloomberg JPMorgan Asia Dollar Index is poised for a 4.4% drop this quarter – the steepest since 1997 when the Asian financial crisis pummelled currencies.

Meanwhile, the ringgit was traded mostly higher against a basket of major currencies.

The local note rose against the British pound to 5.3379/3409 from yesterday’s close of 5.3480/3516, gained against the Singapore dollar to 3.1596/1619 from 3.1645/1671 and strengthened against the euro to 4.5966/5992 from 4.6227/6259 previously.

However, the local currency depreciated versus the Japanese yen to 3.2228/2251 from 3.2217/2242 yesterday. – Bernama, June 30, 2022