FBM KLCI inches up as trade tensions ease

[MALAYSIA] The FBM KLCI regained positive footing after a weak start on Thursday, buoyed by a more conciliatory tone in U.S.-China trade discussions that left Wall Street with a mixed close overnight.

The modest recovery in Malaysia’s benchmark index mirrors cautious optimism across regional markets, as investors weigh the implications of renewed dialogue between the world’s two largest economies. While short-term sentiment has improved, analysts caution that uncertainties around future tariff measures remain a key concern.

At 9.14am, the FBM KLCI edged up 1.08 points, or 0.07%, to 1,584.59, after slipping 0.76 of a point at the open to 1,582.75. On Wall Street, the Dow Jones Industrial Average dipped 0.21% to 42,051.06, while the S&P 500 rose 0.10% to 5,892.58. The Nasdaq Composite advanced 0.72% to 19,146.81, lifted by strength in technology stocks amid sustained optimism over artificial intelligence and semiconductor demand.

This disparity in U.S. market performance underscores a shift in investor appetite towards growth sectors, as traditional industries contend with ongoing volatility in commodity prices and interest rate outlooks. Rakuten Trade noted that the FBM KLCI could soon test the 1,600 threshold, expecting the index to trade within the 1,580–1,590 band throughout the day.

The research firm highlighted that the benchmark index ended marginally higher in the previous session, driven in part by continued foreign buying, with net inflows totaling nearly RM935 million over the past two days.

The return of foreign investors suggests rising confidence in Malaysia’s equity market, which remains undervalued relative to regional peers. Investor interest has been particularly strong in consumer and manufacturing counters, supported by resilient domestic consumption despite external headwinds.

Notable gainers on Bursa Malaysia included Nestle, which climbed 58 sen to RM85.38; Malaysian Pacific Industries, up 32 sen to RM21.64; F&N, which rose 18 sen to RM26.90; and Batu Kawan, which added 10 sen to RM19.

On the downside, Allianz slipped 22 sen to RM19.26, PETRONAS Dagangan declined 22 sen to RM20.32, JcbNext fell 13 sen to RM1.55, and LPI Capital eased six sen to RM14.40.

Looking ahead, Inter-Pacific Research said investors are likely awaiting Malaysia’s first-quarter 2025 GDP report, due out tomorrow, to gauge the broader economic impact of recent trade policies. However, the anticipated effect is expected to be limited, thanks to prior stockpiling and stable domestic activity.

Economists forecast a slight moderation in Malaysia’s Q1 GDP growth, reflecting global trends, though strong exports and private investment are expected to provide support. Key sectors including electronics, commodities, and tourism are projected to post solid contributions, offsetting weaker showings from construction and property segments.

“Given the current backdrop, the FBM KLCI is likely to adopt a sideways trading pattern in the near term, holding above the 1,580 level,” Inter-Pacific added. “Immediate resistance is seen at 1,586 to 1,590, with the psychological barrier at 1,600. Support levels are pegged at 1,575 and 1,565 points.”