Tariff Impact Exacerbated - Apex Research

Malaysia Market Review

The FBM KLCI (-4.0%) experienced a bloodbath, falling to a 16-month low due to widespread selling that mirrored a regional market decline. This was largely attributed to fears of a global trade war and a potential economic slump following US President Trump's tariffs. The lower liners also took a beating with all 13 major sectors closed in red.

Global Markets Review

Wall Street major indices – the S&P 500 (-0.23%), Dow (-0.91%) and Nasdaq (+0.1%), all closed lower after a volatile trading day, on concerns about a potential economic slowdown and rising inflation exacerbated by President Trump's continued push for tariffs and his threat of further increases on China. European markets also experienced turbulence on Monday, with the STOXX 600 (-4.5%) closing at its lowest point since Jan 2024. The slump, with major bourses falling between 4% and over 5%, was attributed to ongoing concerns about an aggressive trade war. Similarly, Asian markets retreated, with sharp declines seen across key indices: Nikkei 225 (-7.8%), HSI (-13.2%), China's Shanghai Composite (-7.3%), KOSPI (-5.57%), and SGX (-7.4%).

Market Outlook

President Trump's sweeping tariffs have triggered significant volatility and a downturn in global markets, including Wall Street, with the S&P 500 experiencing its largest two-day loss since the pandemic. The volatility, driven by fears of an economic slowdown and rising inflation, is likely to create a challenging environment for global trade. For Malaysia, this translates to heightened uncertainty, with potential negative implications for export-oriented sectors. While specific impacts will depend on the duration and extent of the trade disputes, the overall outlook for the Malaysian market is one of increased risk and potential for further volatility. Still, we gather that selling pressure appears to have eased on Wall Street overnight that slight improved sentiment may potentially lend some support to stocks across Bursa Malaysia today. 

Sector focus. Amid market downturn turmoil, we continue to recommend a defensive investment strategy. Sectors like REITs, Utilities, and Healthcare (ex-gloves) are anticipated to provide relative stability, thus aiding in portfolio risk mitigation. Conversely, we recommend reducing exposure to more cyclical and highly exposed sectors, for the time being.

FBMKLCI Technical Outlook

Technical Commentary: The FBM KLCI gapped down again and closed sharply lower as the key index drifted further from the 1,500 psychological level. Indicators turned negative with the MACD Line slipped below the Signal Line, while the RSI fell into the oversold territory. The key index may attempt to finds stability over the interim. Immediate resistance is located at 1,500. Support is envisaged around 1,420.