KUALA LUMPUR (Jan 8): The FBM KLCI slumped 1.27% this morning in line with regional markets rattled by escalating Middle East tensions following rocket attacks on Iraq.

At 9.05am, the FBM KLCI lost 20.26 points to 1,590.78.

The early losers included Nestle (M) Bhd, Hong Leong Financial Group Bhd, PPB Group Bhd, Public Bank Bhd, Petronas Dagangan Bhd, Hong Leong Bank Bhd, Allianz Malaysia Bhd, Kuala Lumpur Kepong Bhd, Axiata Group Bhd and Petronas Chemicals Group Bhd.

Bloomberg said stocks in Asia were set for a mixed start Wednesday as the recent escalation in U.S.-Iran tensions kept a lid on sentiment. U.S. equities earlier dipped and the dollar rose, while oil continued its retreat from multi-month highs.

Futures slipped in Japan and Hong Kong, with contracts flat in Australia, after the S&P 500 Index edged lower. The dollar advanced versus the yen, while the 10-year Treasury yield rose to 1.82% after indicators pointed to a resilient U.S. economy. The Australian dollar tumbled, it said.

Hong Leong IB Research said following the airstrike in Baghdad last Friday, most of the market participants are having further concerns the tensions may persist and it could dampened the risk appetite for equities moving forward.

Also, it said with the US defence official stating that Iran’s military is displaying “heightened state of readiness”, coupled with the breaking news that the Iraqi airbase (hosting US troops) is fired with missile attacks may cap upside on Wall Street and investors would look into safe haven assets.

“The Dow’s trading range will be located around 28,000-29,000 and the Dow futures are plunging more than 250 points (at the point of writing).

“Although technicals on FBM KLCI are fairly positive, breaking news this morning stating that rockets were fired at an Iraqi airbase that hosted US troops could send equities on a lower note.

“Also, despite market participants are focusing on the Phase 1 trade deal, the heightened US-Iran tensions would put pressure on the upside on FBM KLCI for now.

“The FBM KLCI’s resistance is located around 1,620. Nevertheless, traders may lookout for safe haven asset (gold and Japanese yen) for alternative trading opportunities,” it said.