Bursa Malaysia rebounds cautiously amid trade tensions

[MALAYSIA] The selling pressure on Bursa Malaysia eased on Tuesday after the previous day's dramatic loss as investors considered the implications of the recent tariff measures. The FBM KLCI fell 4% yesterday but appears to have regained its footing, with a 0.5% or 7.63 point comeback to 1,451.43.

Market analysts attribute the brief respite to bargain-hunting activities, particularly in oversold sectors such as construction and utilities. However, the broader sentiment remains cautious as global trade tensions continue to weigh on investor confidence. The recent tariff escalations between the US and China have reignited fears of a prolonged economic slowdown, which could further dampen Malaysia’s export-driven sectors.

Wall Street futures are pointing to a rally at the time of writing, which has boosted mood in Asia. However, TA Securities adds that the downside risk exists as the US and its trading partners are expected to exchange tariffs again.

Adding to the uncertainty, economists are closely monitoring the upcoming US Federal Reserve meeting, where policymakers may provide clues on interest rate trajectories. A more hawkish stance could strengthen the US dollar, potentially exacerbating capital outflows from emerging markets like Malaysia. This comes as the ringgit remains under pressure, trading near multi-month lows against the greenback.

"Further correction is expected amid heightened uncertainty, with most investors likely to be sidelined as they await further retaliation measures from major US trading partners such as Canada and the EU," according to its market commentary.

Immediate support is revised lower to the 1,400 psychological level, followed by the June 2023 low of 1,369. Meanwhile, immediate resistance has been lowered lower to 1,490, which marks the 38.2%FR of the rally from the 1,369 low (June 2023) to the 1,684 top (August 2024), with further upside obstacles expected at the 50%FR (1,527) and 61.8%FR (1,564).

On the corporate front, several companies have issued statements reassuring investors about their resilience amid the market volatility. Sunway Bhd, for instance, highlighted its diversified business model as a buffer against sector-specific risks, while YTL Power emphasized its stable earnings from regulated assets. Such disclosures may provide some near-term support to select stocks, though broader market direction will likely hinge on external developments.

Blue chips Sunway rose 13 sen to RM4.17, YTL Power up eight sen to RM3.07, Press Metal climbed 14 sen to RM4.53, and Gamuda added 10 sen to RM3.79. In terms of actives, MYEG increased by 6.5 sen to 77.5 sen, Revenue by three sen to 11.5 sen, and Elridge by one sen to 46.

Despite the day’s modest gains, trading volume remained subdued compared to recent averages, reflecting the prevailing wait-and-see approach among market participants. Analysts suggest that sustained recovery will require clearer signs of de-escalation in global trade tensions or stronger domestic economic data to restore investor confidence.