KUALA LUMPUR (July 6): The Malaysian stock market came under selling pressure as the United States decided to go ahead with tariffs on US$34 billion worth of goods from China, which was quickly followed by the Chinese response of retaliatory tariffs, signalling the beginning of a "trade war" between the two largest economies in the world.

As at 5pm, the benchmark index FBM KLCI fell by 1.58% or 26.79 points to close at its intraday low of 1,663.86 points.

On the broader market, decliners led gainers by 539 to 286 with 383 counters traded unchanged. About 2 billion shares worth of RM2 billion were seen traded on the open market.

According to Kenanga Investment Bank Bhd's head of research, Chan Ken Yew, the decline seen in the stock market is reflective of the concern on the impact of the trade tariffs on the global economy.

"The tariffs have kicked in as announced by President Trump. While we're not sure what the retaliatory move from China would look like, Beijing has already announced that they will retaliate immediately. While a lot of these have been priced in, investors and traders are now concerned about the real impact on trade numbers and how it will affect the economy. The selldown is not exclusive to Malaysia as it also hurts some of the other markets in South East Asia," Chan told theedgemarkets.com over a telephone exchange.

He added that the market is watching for a support level before the index could see a rebound but further volatility is expected amid uncertainties surrounding the trade tension.

In Asia, Japan's Nikkei 225 gained by 1.12% or 241.15 points to close at 21,788.14 points. China's market stayed buoyant, with the Shanghai Stock Exchange Composite closing 0.49% or 13.35 points higher at 2,747.23 points after its initial downtrend during market opening.

Equity markets in Southeast Asia were less sanguine as Singapore's Strait Times Index closed firmly in the red after it fell by 2.1% or 68.32 points to 3,188.39 points while Jakarta Composite Index also slipped lower by 0.58% or 33.57 points to 5,705.77 points.

Reuters reported that Japan's Nikkei rose for the first time this week as investors took heart from the gains in Chinese stocks and covered their positions after early wobbles when Washington's tariffs on Chinese imports took effect.