KUALA LUMPUR (July 24): The FBM KLCI gave up most of its previous session’s gains today, as investors took profit amid escalating tensions between the US and China.
China, in a tit-for-tat move, has told the US to close its consulate in Chengdu, soon after Trump administration’s order to close China’s consulate in Houston.
At 5pm, the local key benchmark index finished 16.81 points or 1.05% lower at 1,589.61, due to selling pressure across the board. On Thursday, it jumped 19.44 points or 1.22% to 1,606.42.
The market breadth was negative today, with 625 losers versus 367 gainers, while 481 counters remained unchanged. Some 9.89 billion securities worth RM5.19 billion were traded across the exchange.
Among top losers were Top Glove Corp Bhd and Hartalega Holdings Bhd, which sank 2.6% and 1.8% to RM25.44 and RM17.68, each.
Asia equities also tumbled due to deteriorating relations between the two largest economies in the world.
Bloomberg reported that stocks fell with US equity futures on Friday, amid concern over escalating Sino-American tensions and worries the recovery in the world’s largest economy has stalled. Five-year Treasury yields touched an all-time low.
Beijing’s latest move further strains the increasingly fraught relationship with the US, which forced China to leave its mission in Houston earlier this week. The two superpowers have also recently clashed on trade and early handling of the coronavirus, raising fears of a protracted conflict, the report added.
CNBC reported that mainland Chinese stocks deepened losses by the afternoon, with other Asia Pacific markets also moving lower as US-China tensions worsened on Friday.
Mizuho Bank head of economics and strategy Vishnu Varathan said: “For now, US-China conflict risks are poised to reinforce pre-existing negative bias in the Asia session, derived from 1.2%-1.3% drop in Wall Street that had predated Pompeo’s remarks.”
In China, the Shanghai Stock Exchange Composite Index plunged 3.86%, while the Hong Kong Hang Seng Index dropped 2.21%.
Japan's Nikkei 225 and South Korea's Kospi declined 0.58% and 0.71% respectively.
In Malaysia, Public Investment Bank Bhd technical analyst Lee Siao Ping said the movement in KLCI was relatively choppy this week and he expects the same trend for the coming week.
He said the choppy trade on the local bourse was contributed by the heavyweight glove stocks, namely Top Glove and Hartalega, as well as the external factors including geopolitical tensions between the US and China.
From a technical viewpoint, Lee said the two glove counters could be trading sideways next week, as the Moving Average Convergence/Divergence (MACD) currently signals there is no upside momentum.
Also, should the external factor worsen, the KLCI may trade sideways with bearish bias next week, he pointed out.
“Our support levels stand at 1,580 and 1,559, with resistance levels at 1,600 and 1,600,” he added.