KUALA LUMPUR: The FBM KLCI rose in early trade as oil prices continued its decline amid an easing of tensions in the Gulf, although gains are expected to be capped as traders look ahead to the Federal Reserve rate decision.
Malaysia's benchmark index was trading 3.29 points higher at 1,715.6 at 9.09am, tracking a rally in the Dow Jones overnight, which tacked on over 500 points amid reports of progress in US-Iran talks.
The biggest gainers were bank shares, including Maybank up six sen to RM10.96, CIMB rising four sne to RM7.80, RHB adding three sne to RM8.47 and Ambank gaining four sen to RM6.54.
Nestle, which announced an improved quarterly result yesterday, extended its rally by RM1.02 to RM94.68.
Amid the positive reaction over the easing of tensions in Iran, Apex Securities cautioned that the upcoming Fed meeting would be one of the most challenging policy meetings in recent years.
"While the consensus continues to favour the Fed keeping interest rates unchanged at 3.50%–3.75%, market conviction remains fragile amid persistent oil-driven inflation risks.
"Adding to the uncertainty, the U.S. Consumer Confidence Index fell to 90.8 in July, below the consensus forecast of 92.3 and down from June's upwardly revised 92.2, reinforcing concerns over moderating economic momentum even as inflationary pressures remain elevated," it said in its market outlook.
The selling pressure on local semiconductor players continued amid the rotation out of global tech. MPI dropped 46 sne to RM43.54, Unisem shed eight sen to RM4.65 and Fronken was down seven sen to RM4.91.
Of actives, Tanco was up one sen to 27 sen, Xin Synergy gained one sen to 22 sen and GIIB rose 0.5 sen to 52 sen.
Brent crude futures for September delivery fell nearly 5% in the previous session to US$84 a barrel. However, the commodity has since rebounded to hover around US$87 a barrel as US data showed shrinking inventories.
