Markets In Dire Need Of Credible Signalling From Trump - Economists
By Nur Athirah Mohd Shaharuddin
KUALA LUMPUR, March 24 (Bernama) -- Global markets, including the stock and currency markets in Malaysia, urgently require clear and consistent signals from United States President Donald Trump to achieve a sustained de-escalation of the conflict in West Asia and restore stability, said economists.
They said there is still a lack of clarity on whether the war between the US, Israel and Iran will end soon, although markets have shown some signs of normalisation after more than three weeks of volatility.
IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said Trump’s announcement on Monday regarding a five-day postponement of all strikes on Iranian power plants and energy should be seen more as a temporary measure for damage control rather than a genuine change in geopolitical risk.
“The postponement is best interpreted as a temporary stabilisation rather than a structural inflexion point,” he told Bernama.
Meanwhile, Malaysia University of Science and Technology, provost and dean of the Institute of Graduate Studies, Prof Emeritus Dr Barjoyai Bardai, said the five-day postponement of the US attack on Iran had an immediate calming effect on oil markets, causing global oil prices to drop instantly after the announcement.
A research report yesterday said that oil prices will average about US$75/barrel this year, from US$65 to US$70 per barrel in 2027, based on a short-lived conflict and a gradual restoration of oil supplies.
“This pause meaningfully reduces short-term volatility because markets were pricing in the risk of a full shutdown of the strait, which would have been catastrophic for supply and shipping routes,” said Barjoyai.
Sedek said that while underlying geopolitical risks remain unresolved, conflicting narratives between both sides continue to undermine market confidence.
“As a result, investors are likely to stay cautious, with energy prices remaining sensitive to news flow and prone to sudden reversals,” he said, adding that until there is a clear, coordinated policy direction, uncertainty will persist and volatility will remain embedded in global markets.
Despite Trump’s declaration of a pause, Iran has rejected the president’s claims that talks are ongoing with Tehran.
Sedek highlighted that the temporary de-escalation announced by Trump has had a noticeable but short-lived impact on global market volatility, particularly in energy prices.
This was evident in the futures market where Brent crude oil fell sharply from US$114 per barrel to below US$100 this morning, before rebounding above that level, he said.
Sedek said the pressure was now on the US to ensure the pause is realised, as its affiliated countries in Asia continue to face the economic strain of elevated crude oil prices.
“This likely explains why Trump issued a more conciliatory statement, aiming to guide prices back below US$100 per barrel,” he said, adding that while the announcement initially triggered a meaningful decline in oil prices, the effect lasted for less than a day and proved to be short-lived.
As it stands, oil prices are likely to remain around US$100 per barrel unless there is clear alignment in messaging and policy direction between the US and Iran.
Barjoyai said that the temporary de-escalation reduces the immediate risk of conflict but increases uncertainty due to the unresolved underlying strategic confrontation. He described the situation as not a turning point, but rather a fragile and conditional pause.
Resurging Tensions Could Drive Oil Prices
Sedek said the inflation impact on Malaysia will be gradual due to the possibility of a spike in oil prices if the tensions resume after the five-day pause.
Higher energy costs are first absorbed at the producer level, so headline inflation remains contained initially, but if elevated prices persist into a second or third month, cost pressures will start to pass through to consumers, leading to a modest rise in inflation, particularly in energy-sensitive sectors, he said.
“As a net importer of petroleum and with significant exposure to global supply routes, rising prices translate directly into higher import costs.
“As the government absorbs the price shock to protect consumers, subsidy costs can rise sharply in a short period, even as targeted assistance is extended to critical sectors such as logistics and agriculture, including fertiliser support,” said Sedek.
ASEAN Supply Chains Amid Geopolitical Uncertainty
Barjoyai said the ASEAN region faces a moderate risk of supply chain and trade disruptions stemming from instability in West Asia, mainly due to its reliance on imported crude oil.
While ASEAN is not as heavily exposed as major East Asian (China, Japan and Korea) economies, higher oil prices and potential disruptions to key shipping routes could still push up freight and insurance costs, with knock-on effects on production and trade.
He said the impact is likely to remain manageable in the near term, but could become more noticeable if tensions persist.
“Global supply chains (fertilisers, petrochemicals, electronics) are sensitive to oil price shocks,” said Barjoyai.
-- BERNAMA