KUALA LUMPUR: Growing uncertainties in the external environment are exerting pressure on the domestic market, and likely to dictate near-term direction, according to Apex Securities.
The research firm is conservative on the FBM KLCI this week, as the rotation into smaller-cap names suggests investors remain unwilling to commit meaningfully to index heavyweights amid persistent geopolitical and rate uncertainty.
It added that upside will likely be capped until there's greater clarity on both the Hormuz situation and the Fed's policy path.
"An upside surprise in the CPI reading would make it difficult for the Fed to avoid a rate hike, with investors' attention squarely focused on this week's inflation data as the key determinant of the Fed's next move.
"We stay cautious on near-term global risk appetite, as the combination of surging oil prices, rising Treasury yields, and escalating Middle East tensions creates a challenging backdrop heading into a pivotal inflation print and FOMC decision, even as resilient strength in semiconductors offers some offsetting support," said the research firm in its market outlook.
As at the time of writing, the CME FedWatch Tool has a 58.1% probability the Fed will raise interest rates by 25 basis points at the Sept 16 meeting.
At 9.17am, the FBM KLCI was up 2.78 points to 1,717.18, driven higher by a rebound in certain blue chips.
Hong Leong Bank rose eight sen to RM23.66, Telekom gained nine sen to RM7.98, YTL Power rose four sen to RM5.82 and IHH climbed five sen to RM7.89.
Top active stocks were Zetrix AI down two sen to 28.5 sen, NexG up 2.5 sen to 29.5 sen and GTA dropping 4.5 sen to 29 sen.
