Asian bourses ended last week on a cautious note, pulling back from recent highs as uncertainties surrounding the US–Iran peace process resurfaced. Initial optimism over an interim agreement faded amid concerns over the complexities of securing a durable resolution, particularly following reports that Tehran is seeking clearer commitments before advancing further negotiations, alongside the cancellation of a planned meeting involving JD Vance. Trading activity was also subdued, weighed by market holidays in China, Hong Kong and Taiwan, as well as the closure of US markets in observance of Juneteenth.
On Wall Street, the Dow gained 0.7% over the holiday-shortened week to close at 51,564, while Brent crude retreated 7.7% to USD80.6/bbl and the US 10-year Treasury yield eased 3bps to 4.46%. Investor sentiment was supported by optimism surrounding a potential US–Iran ceasefire agreement and the reopening of the Strait of Hormuz, which helped alleviate concerns over energy supply disruptions and inflationary pressures. However, gains were capped by a hawkish undertone from the 16–17 June FOMC meeting. This week, market attention will turn to the release of May personal income and spending figures, as well as the May PCE price index—the Fed’s preferred inflation gauge—for further clues on the policy trajectory.
Tracking the mixed regional markets, KLCI fell as much as 12.2 points to an intraday low of 1,699.2 before staging a late rebound to close marginally higher by 0.64 points at 1,712, marking its seventh consecutive day of gains. The recovery was supported by bargain hunting in selected heavyweights, including PPB, SIME, IOICORP, KLK, TM and TENAGA.
After a significant MTD foreign outflow of RM1.86bn, foreign investors turned net buyers last Friday at RM146m (5-day rolling: -RM89m; MTD: -RM1.72bn). In contrast, local retailers recorded net selling of RM99m (5-day rolling: -RM254m; MTD:
+RM165m) alongside local institutions (-RM47m; 5-day rolling: +RM343m; MTD: +RM1.55bn).
HLIB noted that the KLCI is approaching the tail end of its double-top correction, having rebounded from the recent low of 1,673 after peaking near 1,770, and closing at 1,712 on 19 June. The index has since reclaimed both the MA20 (1,692) and MA50 (1,709), signalling improving short-term momentum. A decisive breakout above the key downtrend resistance near 1,720 would confirm a continuation of the recovery phase, potentially opening upside toward 1,732 (10% FR) and 1,750. On the downside, failure to clear resistance may result in extended consolidation, with immediate supports at
1,700, followed by 1,681 (23.6% FR) and 1,671 (MA200).
The KLCI is likely to stay range-bound amid headline-driven volatility, as markets track US–Iran peace talks in Switzerland alongside reassessment of a more hawkish Fed stance. Lingering uncertainty over the economic fallout from months of conflict is also expected to keep risk appetite subdued. Domestically, sentiment remains cautious, weighed by a weaker ringgit (-6.4% from its YTD low of RM3.88), rising political risk premiums ahead of state elections in Johor (11 July) and Negeri Sembilan (1 August), alongside speculation of an early GE16 (officially due February 2028). Collectively, these headwinds are likely to cap upside near the 1,732 resistance.
