KLCI Slides as Hormuz Tensions Trigger Risk-Off Selling

The FBM KLCI came under heavy selling pressure on Tuesday, falling 1.47% to 1,700.54 as escalating tensions around the Strait of Hormuz and renewed concerns over US monetary policy triggered a broad-based risk-off move.

Market breadth was firmly negative, with 956 decliners against just 349 advancers. Energy was the standout performer, rising 1.47%, while Transportation gained 0.34%. Industrial Products and Technology led the declines, falling 2.47% and 2.18% respectively.

Hormuz tensions

The sell-off followed a surge in crude oil prices after fresh US-Iran strikes and attacks involving vessels near the Strait of Hormuz. Brent crude approached US$92 a barrel, raising concerns over higher energy costs and renewed inflationary pressure.

For the local market, investors are likely to remain cautious amid heightened geopolitical uncertainty. Earnings season should continue to provide stock-specific opportunities, although broader sentiment is likely to remain influenced by movements in oil prices, US Treasury yields and expectations for global interest rates.

The Energy sector is expected to remain in focus as elevated crude prices continue to support sentiment towards oil-related counters. Meanwhile, the KL Finance Index could face further pressure as fund managers position ahead of the FBM KLCI 50 transition, potentially diluting the weighting of financial stocks.

Technically, the KLCI has lost around 50 points over the past three trading sessions after retreating from the 1,750–1,760 resistance zone. A break below 1,700 would reinforce the prevailing bearish trend and could open the way towards 1,685.

Any technical rebound is likely to face resistance at 1,720–1,730.

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