FBM KLCI holds steady amid trade war optimism

[MALAYSIA] The FBM KLCI began Thursday’s trading session on a flat note, opening around the 1,500 level as investors cautiously extended gains from the previous day. Sentiment appeared buoyed by increasing optimism over a potential de-escalation in the ongoing US-China tariff standoff.

At 9am, the benchmark index dipped 1.16 points to 1,500.55, but managed to hold firm at a key technical threshold—previously a resistance level now acting as support—on the back of improved investor confidence.

Market observers attributed the tentative positive mood to encouraging signals from both Washington and Beijing, with recent developments hinting at a possible softening in trade tensions. Sources suggest that closed-door discussions are gaining momentum, with both sides reportedly considering partial tariff reductions to ease mutual economic strain. Nevertheless, skepticism lingers as traders remain mindful of earlier failed attempts at resolution.

On Wall Street, stocks were lifted overnight following remarks from US policymakers suggesting a potential rollback of tariffs on Chinese imports. However, the rally lost steam by the close, with markets unable to hold onto intraday highs amid ongoing geopolitical uncertainties.

Rakuten Trade remarked that the absence of contradictory statements from US President Donald Trump had offered some relief to markets, while the US 10-year Treasury yield edged lower to 4.385%.

The brokerage also noted that regional markets, particularly in Southeast Asia, were reflecting similar cautious optimism. Early gains were recorded on Singapore’s Straits Times Index and Indonesia’s Jakarta Composite, in line with hopes for a more stable global trade landscape. However, fluctuations in key commodity prices, notably crude oil and palm oil, continued to weigh on investor confidence, particularly for export-reliant economies such as Malaysia.

Rakuten also expressed some surprise at the FBM KLCI's strong close at the 1,500 mark in the previous session, especially following a lackluster performance the day before.

Whether this momentum is sustainable remains uncertain, but there is optimism the index may soon retest the 1,530 level.

"Still, trading volume remained muted at under three billion shares, suggesting sentiment may stay cautious. We expect the index to move within the 1,500 to 1,515 range today," it added in its daily commentary.

Looking ahead, economists are closely watching Malaysia’s upcoming economic indicators, including June’s export data and inflation figures, for further market cues. A robust showing could lend support to continued equity gains, while weaker results may push investors back toward defensive positions.

In its technical outlook, TA Securities maintained immediate resistance at 1,527, marking the 50% Fibonacci retracement (FR) of the rebound from the 1,369 low recorded in June 2023 to the 1,684 peak in August 2024.

Further resistance levels were identified at the 61.8% FR of 1,564 and the 76.4% FR of 1,610. On the downside, support remains at the 23.6% FR of 1,444, with stronger supports at the 1,400 psychological level and the June 2023 trough of 1,369.

Leading early gains, Hong Leong Financial Group advanced 18 sen to RM17.10, PETRONAS Dagangan rose 14 sen to RM19.44, and CIMB edged up eight sen to RM6.93.

Among the most actively traded counters were Digistar, climbing 1.5 sen to six sen, Velesto, which held steady at 14.5 sen, and SFP Tech, which added one sen to 21.5 sen.