Risks On Market Against Cautious Central Banks: MARC

Malaysia posted a firmer gross domestic product (GDP) print of 3.3% in 3Q2023 (2Q2023: 2.9%) MARC says in line with the advanced estimate, bolstered by private consumption which grew at a faster pace. The latest October trade data showed some nascent signs of recovery in the external sector, supported by an anticipated recovery in the Chinese economy and global semiconductor market.

The ringgit displayed signs of improvement against the greenback as the broad dollar weakness is driven by prospects of a potential conclusion to the US rate tightening cycle.

Uncertainties over the Middle East conflict and mixed outcomes in upcoming inflation indicators from advanced economies could heighten market volatility.

The upward momentum in US Treasury (UST) yields since July has reversed, with lower long-end yields, even after a brief uptick following the US credit rating outlook downgrade. The reversal should support the local bond market along with the anticipated improvement in foreign flows.

Central banks in advanced economies remained cautious in concluding their tightening cycle due to persistent inflation concerns. Despite the Federal Reserve's (Fed) pause decision, risk-on sentiment has surged with expectations for an end of the rate hike cycle in 2024 as key inflation and employment data came in cooler than expected.