KLCI surges on US tariff pause

[MALAYSIA] The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) experienced a significant surge of 4.55% today, closing at 1,800.00 points. This remarkable gain is attributed to U.S. President Donald Trump's announcement of a 90-day suspension of most new tariffs, providing relief to global markets, including Malaysia.​

US Tariff Suspension Boosts Global Markets

On April 9, 2025, President Trump declared a temporary halt to the implementation of new tariffs under his "reciprocal" trade policy, responding to appeals from over 75 countries. However, he increased tariffs on Chinese imports to 125%, citing concerns over China's trade practices.

This announcement led to a historic rally in U.S. stock markets, with the Dow Jones Industrial Average soaring by 7.9% and the S&P 500 rising by 9.5%. Asian markets mirrored this optimism, with Japan's Nikkei 225 jumping 9.1%, and European indices like Germany's DAX and the UK's FTSE 100 also experiencing substantial gains. ​

Impact on Bursa Malaysia

The positive sentiment from global markets permeated Bursa Malaysia, leading to a 4.55% increase in the FBM KLCI. Investors responded favorably to the easing of trade tensions, with bargain hunting activities evident across various sectors. This surge underscores the market's sensitivity to international trade policies and their direct impact on investor confidence.​

Ringgit Strengthens Against US Dollar

In tandem with the stock market rally, the Malaysian ringgit opened higher against the U.S. dollar. The currency strengthened to 4.4500/4700, influenced by the U.S. decision to pause tariff hikes on Canada and Mexico, as well as softer U.S. economic data.

Analysts' Perspectives

Analysts view the U.S. tariff suspension as a strategic move to renegotiate trade terms with various countries, aiming for more favorable agreements. However, the exclusion of China from this pause raises concerns about the potential for continued trade tensions between the U.S. and China, the world's two largest economies. ​

The Malaysian market's reaction highlights the interconnectedness of global economies and the profound impact of international trade policies on local markets. Investors are advised to remain vigilant, as the trade landscape continues to evolve, influencing market dynamics both domestically and internationally.​