KUALA LUMPUR: Bursa Malaysia pulled back as traders reacted to the conflict in the Middle East, which is expected to dirupt crude supply and sap risk appetite for equities.
The FBM KLCI gapped down 27.97 points to 1,688.64, firmly below the 1,700 psychological support, following the surprise attack on Iran over the weekend by US and Isreali forces.
Apex Research noted that Opec+ has signalled a modest increase in crude output to stabilise the market. However. it said the additional supply may only partially offset disruption risks should tensions escalate further.
"Crude prices have turned more volatile, with tail risks skewed to the upside in a scenario of sustained supply constraints, particularly around the Strait of Hormuz.
"This could revive inflation concerns, delay monetary easing expectations, and weigh on broader risk sentiment," said the research firm in its outlook.
As for the Malaysian market, the firmer oil prices are anticipated to lend support to energy-linked counters, although the external uncertainties and potential volatility in foreign fund flows are likely to cap market broadside.
"The FBM KLCI is expected to trade range-bound in the near term, with investors focusing on corporate earnings and macro developments while navigating heightened geopolitical risk," said Apex.
Meanwhile, TA Securities noted a deeper pullback on the FBM KLCI could open the door for bargain-hunters to accumulate at more attractive levels, positioning for potential rebound upside once selling pressure eases.
It said the weakening technical momentum and trend indicators on the FBM KLCI point towards downside pressure until current overbought conditions are fully absorbed.
Externally, persistent US-Iran geopolitical tensions and uncertainty over the trajectory of artificial intelligence remain key drags on risk sentiment, it added.
Amid fears over the impact the economy, bank shares were the main drag on the FBM KLCI as they plunged from a historic high levels.
Maybank dove 30 sen to RM11.66, CIMB shed 11 sen to RM7.93, RHB fell seven sen to RM8.33, Hong Leong Bank dropped 24 sen to RM23.04 and AmBank lost nine sne to RM6.34.
Energy-related stocks, however, went the other direction as Brent crude prices jumped 7% to US$77.58 a barrel.
PETRONAS Dagangan surged 62 sen to RM22.60, PETRONAS Gas gained 26 sen to RM18.22 and PETRONAS Chemicals gained 17 sen to RM3.17.
Hibiscus Peroleum climbed 24 sen to RM1.84.
