Malaysia Morning Wrap | Malaysia Acts to Counter Long-Term Effects of US Tariffs

On Monday, U.S. markets experienced significant volatility as President Trump escalated trade tensions with China. Trump threatened to impose an additional 50% tariff on Chinese goods if Beijing doesn't rescind its newly announced 34% duty on U.S. products.

All three major indexes hit their lowest levels in over a year before partially recovering. The Dow Jones and S&P 500 closed lower, while the Nasdaq Composite eked out a small gain.

The "Magnificent Seven" tech giants showed mixed performance, with NVIDIA, Amazon, Meta, and Alphabet posting gains, while Apple, Tesla, and Microsoft experienced declines. NVIDIA led the advances with a 3.5% increase, while Apple saw the largest drop at 3.7%.

Bursa Malaysia experienced a severe downturn on Monday, with the FBM KLCI index plunging 4.01% to 1,443.80, its lowest level in 16 months. This sharp decline, the largest since August, reflected widespread selling pressure across the market, with 1,296 stocks falling and only 122 rising.

The selloff, which saw trading volume surge to 5.35 billion units worth RM4.7 billion, was largely attributed to escalating global trade tensions, particularly concerns over President Trump's aggressive tariff policies.

Malaysia prepares for extended economic challenges as Trump's new tariffs threaten its major trade partners. The government expects reduced demand, cautious investment, and potential GDP slowdown, but also sees opportunities in some exports.

Trade Minister Tengku Zafrul Abdul Aziz has unveiled a five-point plan to address the 24% US tariffs' impact. This includes activating the National Geoeconomic Coordination Council, creating an industry feedback task force, coordinating with ASEAN, enhancing US engagement, and diversifying export markets.

Zafrul also announced a 24% U.S. tariff on 30% of Malaysia's exports. This affects non-semiconductor electronics, as semiconductors (half of the 60% electronics exports) are exempt.