Malaysia bourse may remain in consolidation phase ahead of US tariff clarity
The FTSE Bursa Malaysia KLCI (FBM KLCI) slid 13.9 points to 1,511.5 on Tuesday, erasing recent gains as global and local uncertainties cast a shadow over near-term market prospects.
HLIB said the benchmark index was weighed down by lingering uncertainty over US-Malaysia tariff negotiations, the risks of potential US export controls on AI chip shipments to Malaysia and persistent foreign outflows.
"Sentiment took a further hit after Indonesia secured a 19 per cent tariff deal with the US, threatening Malaysia's export competitive edge in Asean.
"Foreign investors remained net sellers, extending their exit streak. In contrast, local retailers and institutions stepped in as major support pillars," the firm said in a note.
HLIB added that the FBM KLCI may remain in consolidation mode ahead of the US-Malaysia tariff decision and clarity on potential US export curbs on AI chip shipments.
"Domestically, the upcoming August results season may add pressure, with looming policy shifts - fuel and electricity subsidy rationalisations, port tariff hikes, along with sales and service tax expansion in the second half of 2025 - set to dampen consumer sentiment and cloud earnings visibility," it said.
HLIB said Asian markets struggled for direction following a sharp overnight drop on Wall Street, as traders remained jittery over the impending tariff decisions.
This overshadowed China's second-quarter gross domestic product reading and a fresh US approval for Nvidia's chip sales to China.
On Wall Street, the firm said while Dow Jones rebounded 232 points after a steep decline, investor focus is shifting to upcoming corporate earnings from TSMC, ASML, Netflix and PepsiCo, along with key US macro data, including retail sales and consumer sentiment.
"Sentiment improved further after Trump dismissed reports of plans to fire Powell, despite ongoing criticism over high Fed rates and the costly Fed headquarter's renovation.
"Focus now shifts to second quarter earnings with TSMC, ASML, Netflix and PepsiCo on deck, while key macro data - retail sales and consumer sentiment - will be pivotal for Fed rate trajectory amid mounting inflation and trade risks," HLIB said.
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