Rakuten Trade anticipates the FBM KLCI to trade within the 1,700 to 1,715 range.
PETALING JAYA: Equity markets are expected to remain range-bound in the near term, as investors balance improving short-term sentiment against lingering uncertainties surrounding geopolitics, global trade and interest rates.
Experts believe that bargain hunting and selective rotation into fundamentally resilient stocks could continue to provide support, but volatility is likely to persist amid elevated bond yields and shifting capital flows.
The FBM KLCI extended its recovery from Wednesday into yesterday, staging an 11.33-point or 0.66% gain to close at 1,717.14 by 5pm. Gainers outpaced losers 622 to 425, while 589 counters were unchanged. About 2.82 billion shares, valued at RM3.41bil, changed hands.
Investment analyst and country economist at IPP Global Wealth Mohd Sedek Jantan told StarBiz that the FBM KLCI’s rebound over the last two days has helped to ease uncertainty, providing some directional guidance for investors, although he cautioned that risks have not been fully eliminated.
“The recovery was largely technical in nature, following oversold conditions on Tuesday (Jan 20), and supports our view that markets are likely to remain range-bound.
“There is potential to revisit the Jan 15 level of 1,715 points, with modest upside rather than entering a strong directional trend,” he said.
For next week, while pointing out that attention will shift to the Federal Reserve’s (Fed) policy decision, Mohd Sedek suspects markets have largely priced in a no-rate-cut outcome, suggesting limited scope for a major surprise.
As such, he is anticipating near-term performance by the local premier index to remain measured, likely testing the 1,730 to 1,740 range, which he still characterised as modest upside, with investors focusing more on the Fed’s forward guidance and broader macro signals rather than headline policy moves.
“We still maintain an optimistic view that the Fed will cut rates twice this year, and this would definitely benefit equity markets, especially Malaysia,” said Mohd Sedek.
On that note, Rakuten Trade anticipates the FBM KLCI to trade within the 1,700 to 1,715 range, noting that while risk appetite has improved, investors remain cautious.
“It is apparent that the flight of funds out of US-denominated assets is underway,” the brokerage said, pointing to record gold prices that surged past US$4,800 an ounce as evidence of investors seeking safe havens.
TA Research similarly flagged key resistance at 1,727 for the benchmark index, with immediate support seen at 1,645.
Mercury Securities, meanwhile, said the rebound, which began on Wednesday, reflected renewed interest in oversold counters.
“The FBM KLCI reversed losses from the previous session (Tuesday), adding 0.4% to close at 1,706 points (on Wednesday) as bargain hunting lifted the local bourse,” the research house noted.
Wall Street also provided a positive lead, staging a sharp rebound overnight on Wednesday, as the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite each gained about 1.2% after US President Donald Trump sought to reassure markets during his remarks at the World Economic Forum in Davos.
Mercury Securities said the rally came after Trump “de-escalated immediate military concerns regarding the acquisition of Greenland,” triggering a reversal of the earlier “risk-off” sentiment that had weighed on equities and Treasuries earlier in the week.
Nevertheless, macro risks remain firmly in focus.
The yield on the US 10-year Treasury hovered near a five-month high of around 4.29%, reflecting persistent concerns over global bond market volatility and capital reallocation.
Mercury Securities noted that markets are also assessing the impact of bond selling in Japan, alongside broader geopolitical and tariff-related uncertainties involving the United States and Europe.
Refocusing on the domestic macro front, Malaysia’s trade performance provided a degree of support. Trade with Asean rose 1.7% to RM709.1bil for the January to November 2025 period, accounting for 25.6% of total trade.
The Investment, Trade and Industry Ministry or Miti said exports climbed 4.8%, supported by stronger demand for electrical and electronic products, machinery, equipment and scientific instruments, while imports declined due to weaker domestic demand for petroleum products and transport equipment.
In the near term, it would appear that analysts expect markets to remain supported by selective bargain hunting and improving short-term sentiment, but cautioned that sustained upside will depend on clearer signals from global policymakers, stabilisation in bond markets and a de-escalation of geopolitical risks.
