KUALA LUMPUR: A sharp rise in Middle East tensions is expected to weigh on investor appetite as inflationary pressures could reginite, leading to a more hawkish Federal Reserve.
Brent crude futures had risen to US$97 a barrel after a recent exchange of attacks between the US and Iran caused a further decline in traffic in the Strait of Hormuz.
Apex Securities said the FBM KLCI is expected to remain range-bound in the short term as investors balance supportive domestic factors against lingering external uncertainties, with attention on developments in West Asia, global bond yield movements, and upcoming US inflation data for further clues on Fed policy direction.
"We remain cautious despite Monday's positive close, given elevated crude oil prices and rising US Treasury yields, which could keep inflationary pressures elevated and weigh on risk appetite," it said in its market report.
On sector outlook, the research firm said banking counters could extend their gains on support from renewed buying interest and resilient earnings.
Energy counters could also stay in focus given elevated crude oil prices, while REIT and property may remain under pressure amid rising US Treasury yields and lingering uncertainty over the Fed's policy direction.
The FBM KLCI has down 3.57 points to 1,711.22 at 9.06am following the previous day's rebound, keeping the index to a sideways pattern.
Hong Leong Bank dropped eight sen to RM23.58, MISC shed seven sen to RM7.69 and PETRONAS gas slid 18 sen to RM17.62.
Among the leading actives, Zetrix AI rose two sen to 29 sen, GTA rose 0.5 sen to 35.5 sen and HHRG slipped one sen to 19.5 sen.
