KUALA LUMPUR (May 14): The FBM KLCI tumbled 1.73% and fell below the crucial 1,600-point threshold in early trade this morning as regional markets were spooked by the fresh US-China trade spat.
At 9.05am, the FBM KLCI lost 27.29 points to 1,573.80.
The early losers included Fraser & Neave Holdings Bhd, Nestle (M) Bhd, Petronas Gas Bhd, Genting Plantations Bhd, Kuala Lumpur Kepong Bhd, PPB Group Bhd, Tenaga Nasional Bhd, Hong Leong Bank Bhd and MISC Bhd.
The sell-off that sank U.S. stocks and global commodities spilled into Asia after China retaliated with higher tariffs on a range of American goods. Treasuries held gains, as did the yen, amid demand for haven assets, according to Bloomberg.
Tokyo stocks opened down about 2%, while shares also fell in Seoul and Sydney. Futures signal weaker equities in Hong Kong and China when markets open there. All three major U.S. benchmarks ended more than 2 percent lower, only the second time this year that’s happened, after China targeted some of the biggest U.S. exporters in response to American tariffs. The new penalties also took aim at American farmers, driving down soybean and cotton prices. Ten-year Treasury yields hovered near the lowest level since late March. U.S. equity futures steadied in early Asia trading, it said.
Kenanga IB Research said Asian markets declined mostly on Monday as trade war tensions continue to intensify.
It said back home, the FBM KLCI declined 9.18 points or 0.57% to close at 1,601.09.
“We observed that the index had been in a consolidation phase for the past few weeks and that the primary downtrend of the index is still intact as all shorter-term SMAs are trading below longer-term SMAs.
“However, the recent announced rate cut by BNM could be a much-needed catalyst to spur the market. Should the index break above the 100-day SMA (1,667), this could be an early sign of a potential reversal.
“We look towards 1,640 (R1) as an immediate resistance, where a break above would see it head towards 1,660 (R2) level, while on the downside, support levels can be identified at 1,600 (S1) and 1,570 (S2),” it said.