KLCI down 1.06% as hawkish Fed weighs on market sentiment

KLCI down 1.06% as hawkish Fed weighs on market sentiment
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KUALA LUMPUR (June 21): The FBM KLCI fell 1.06% today, in line with declines in Wall Street and regional markets, following hawkish comments from the US Federal Reserves (Fed).

The benchmark index, which opened 8.54 points lower at 1,580.51, closed at 1,572.24 — down 16.81 points from last Friday's close.

Areca Capital Sdn Bhd chief executive officer Danny Wong said the concern that the Fed will normalize the rate faster than expected has dragged overall market sentiment today.

“I think the market is a bit sensitive to this news. I expect the KLCI to rebound over the next few days after digesting the news,” he told theedgemarkets.com.

Hong Leong Investment Bank Research’s analyst Ng Jun Sheng, meanwhile, wrote in a note today that he anticipated the KLCI to continue to trend sideways in the short term, with a slight negative bias, in the midst of a hawkish Fed, elevated Covid-19 cases nationwide, the impact of the full movement control order extension to the economy and corporate earnings, and domestic fluid politics.

“Nevertheless, we still believe the downside risk is likely to be cushioned near the 1,545 to 1,552 zones, as the structured National Recovery Plan with objective thresholds should help control the Covid-19 pandemic in a more sustainable matter, particularly the acceleration of the nationwide vaccination programme with full vaccination rates of 40% target by September/October and 60% by November/December," he wrote.

Across Bursa Malaysia, 6.04 billion securities were traded for RM2.8 billion, compared with 6.31 billion securities worth RM4.77 billion last Friday.

Losers led gainers by 784 to 309, while 393 counters closed unchanged.

Malaysia Airports Holdings Bhd was the top gainer, rising 29 sen or 4.83% to RM6.30. This was followed by ViTrox Corp Bhd, which climbed 28 sen or 1.93% to RM14.78, and Batu Kawan Bhd, which rose 26 sen or 1.35% to RM19.50.

Meanwhile, Malaysian Pacific Industries Bhd was the top loser, falling 74 sen or 1.82% to RM39.94. This was followed by Heineken Malaysia Bhd, which retreated 44 sen or 1.79% to RM24.16, and Tenaga Nasional Bhd, which fell 44 sen or 4.21% to RM10.

VSolar Group Bhd, the most actively traded stock that saw 533.37 million shares changed hands, shed 0.5 sen or 25% to 1.5 sen.

Reuters reported that Asian bourses were tracking Wall Street’s sell-off last week, triggered by fresh comments from a Fed official that the US central bank might raise interest rates sooner than expected.

The Nikkei 225 average lost 3.29% in its biggest percentage fall since Feb 26, to close at 28,010.93.

South Korea’s Kospi also closed 0.83% lower at 3,240.79, the sharpest decline since June 9, while Hong Kong’s Hang Seng dropped 1.08% to 28,489.

Tan Choe Choe