KUALA LUMPUR: Bursa Malaysia continued its downtrend to close lower as geopolitical tensions, and surprisingly strong US retail data, led spooked investors to seek cover.
At 5 pm, the FBM KLCI shed 7.53 points to 1,535.0 from Monday's close of 1,542.53.
The benchmark index, which opened 1.45 points lower at 1,541.08, moved between 1,532.49 and 1,541.59 throughout the trading session.
Market breadth was negative with decliners outpacing gainers 1,159 to 133, while 275 counters were unchanged.
Turnover rose to 4.33 billion units worth RM3.05 billion from 4.28 billion units worth RM3.25 billion on Monday.
Malacca Securities Sdn Bhd head of research Loui Low said overall market was down affected by the rising geopolitical tension concerns, also the idea that the US economy is growing could dampen the probability of the US Federal Reserve (Fed) reducing rates in 2024. "Thus, this is impacting the strengthening in US dollar and Treasury yields, in turn contributing to the fall in the US stock markets, which the selling pressure spillover across the regional stock markets," he said.
SPI Asset Management managing director Stephen Innes said investors found themselves grappling with a myriad of concerns as they navigated through Tuesday's trading session, marked by a heightened sense of apprehension stemming from developments in the Middle East.
"However, the day brought more than just geopolitical tensions to the forefront," he told Business Times.
Adding to the unease was a robust showing from the US economy, as retail sales figures quadrupled estimates, triggering a surge in US yields.
Innes said the unexpected strength in economic data prompted global investors to reassess the likelihood of rate cuts by the Fed raising doubts about whether any such measures would be necessary this year.
"When US interest rates are expected to stay high for a long time, it usually makes the US dollar stronger. But the rise of the dollar made Asian markets nervous and worried local investors," he added.
Back home, Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng said the benchmark index failed to hold its 1,538 support level.
"Hence, we spot the next crucial support level at around 1,528-1,530. "Despite the cautious sentiment, we see the sell-off as an opportunity for investors to engage in bargain hunting at lower levels. "Therefore, we anticipate the FBM KLCI to trend within the range of 1,530-1,550 for the rest of the week," added Thong.
Loui anticipated that the rebound could be happening later this week as it is quite oversold, adding that defensive nature counters within the telco and real estate investment trusts (REITs) will be focused. Companies with high dividend yields above 6.0 per cent will be monitored as well, he added.