KUALA LUMPUR: The FBM KLCI slipped into negative territory at midday on Thursday as cautious sentiment prevailed amid concerns over further US interest rate hikes and elevated global bond yields.
At lunch break, the FBM KLCI fell 3.3 points, or 0.2%, to 1,675.91 after hitting an intra-morning high of 1,684.92.
Market breadth was negative, with losers nearly doubling gainers at 650 to 381, while 486 counters were unchanged. Trading volume stood at 1.99 billion shares valued at RM1.49bil.
Hong Leong Investment Bank Research said the FBM KLCI is likely to remain in an extended consolidation phase following Wall Street’s overnight decline.
It attributed the cautious outlook to a hawkish US Federal Reserve stance, elevated oil prices and bond yields, as well as concerns over the technology sector’s spending boom.
“This challenging external backdrop could be compounded by domestic headwinds, including potential 2H earnings disappointments amid a higher-for-longer cost environment, the overhang from the KLCI’s expansion to 50 constituents, and emerging GE16 political jitters, further tempering sentiment,” the research house said.
Meanwhile, Apex Securities expects the FBM KLCI to trade with a cautious-to-negative bias in the near term following the Fed’s 25-basis-point rate hike and guidance for further tightening.
It noted that the prospect of further rate increases this year, coupled with still-elevated global bond yields, is likely to keep risk appetite subdued and continue to pressure rate-sensitive sectors.
Locally, it said Tuesday’s decline and weak market breadth suggested selling pressure remained relatively broad-based, although the recent pullback could encourage selective bargain hunting at lower valuations.
“Overall, we expect the KLCI to remain volatile and range-bound, with upside likely capped until there is greater clarity on the path of US monetary policy and global inflation,” Apex said.
Additionally, Apex said easing crude oil prices could provide some relief to energy-intensive sectors such as transportation and logistics, and construction, although it may temper near-term momentum in the energy sector.
It said recent developments in AI-related sentiment could continue to weigh on the local technology sector, while plantations are expected to remain supported by firmer crude palm oil prices.
Among the gainers, Nestlé jumped 72 sen to RM90.90, Carlsberg rose 50 sen to RM12.88, Heineken added 34 sen to RM14.56 and IOI Properties
gained 14 sen to RM3.79.
Decliners included F&N, which slid 26 sen to RM22.86, Hong Leong Industries, which fell 24 sen to RM16.82, PETRONAS Chemicals, down 22 sen to RM4.98, and Panasonic Manufacturing, which eased 21 sen to RM5.35.
Newly listed Pioneer Heat rose 30%, or 7.5 sen, to 32.5 sen, with 66.8 million shares traded.
