Rate Cut On The Card After Slowdown In US Job Data

MIDF Amanah Investment Bank Bhd (MIDF Research) suggested that the Federal Reserve (Fed) may consider a rate cut to bolster economic growth in response to the slowing job growth in the US.

While the recent job figures from the US Non-Farm Payroll (NFP) data are seen as one-off occurrences where although the US added 12,000 jobs last month, it is still a notable slowdown compared to previous months, attributing it to the disruptions caused by weather events and ongoing labour strikes.

Despite the challenges, the unemployment rate remained steady at 4.1%, suggesting that while job creation has decelerated, the overall employment landscape has not deteriorated significantly.

As such, the potential for a 25-basis points rate cut in November remains high.

Notwithstanding the temporary setbacks in job growth, the broader economic context suggests that the US economy remains resilient and this is evidently shown by the positive performance of major US stock indices where the Dow Jones, Nasdaq and S&P 500 all closed higher, with gains ranging from 0.41% to 0.8%.

With the anticipation of rate cuts, there is potential for improved sentiment in the domestic equities market, which could lead to renewed foreign investment interest in Malaysian stocks. MIDF Research maintained its 2024 targets for the FBM KLCI, FBM Hijrah and FBM70 indices, reflecting a measured outlook amid the evolving economic landscape.

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