KLCI Holds Mild Upward Bias as Geopolitical Risks Cap Gains

The FBM KLCI is expected to maintain a mild upward bias this week, although geopolitical uncertainty and elevated crude oil prices could limit gains and keep investors selective.

The benchmark index slipped marginally on Monday, easing 0.38 points, or 0.02%, to 1,735.37 as investors remained cautious amid uncertainty over US monetary policy and developments surrounding the Strait of Hormuz. Despite the flat performance, market breadth was positive, with 713 gainers against 443 decliners.

Technology led sector gains, rising 2.52%, followed by Energy at 0.96%. REIT and Plantation counters lagged, declining 0.13% and 0.22% respectively.

Global insights

Global equities were softer, with the Dow Jones, S&P 500 and Nasdaq falling 0.11%, 0.06% and 0.32%. The key concern remained oil prices, which surged as tensions surrounding the Strait of Hormuz persisted. WTI crude climbed 5.1% to US$82.13 per barrel, while Brent rose 5% to US$87.72.

The rise in oil prices could reinforce inflationary pressures and raise operating costs for selected industries, although expectations of less aggressive US monetary policy continue to provide some support for risk appetite. September Fed rate-hike expectations have fallen to around 52%, from 67% a week earlier.

FBM KLCI

For the KLCI, resilient domestic economic conditions and sustained interest in selected heavyweights could help cushion external volatility. Technology counters may continue to attract buying interest following their strong performance, while Utilities and Energy could remain supported by defensive positioning and higher crude prices. Plantation and REIT stocks may remain comparatively subdued.

Technically, the KLCI remains within a downward-sloping channel that has constrained the index since its January peak. However, it continues to hold above its 9-day, 20-day and 120-day moving averages, indicating that the short-term trend remains constructive.

A decisive break above 1,760–1,770 would signal a stronger trend reversal. Immediate support remains at 1,735, followed by 1,700.

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