Asian markets recovered from an early selloff as progress in US–Iran peace negotiations helped ease geopolitical tensions and reduce concerns over global energy supply disruptions, while investors also welcomed a proposed roadmap targeting a final agreement within 60 days. However, gains were capped by lingering caution over a potentially hawkish Fed outlook, with expectations of rates staying higher for longer, and focus now shifting to upcoming US PCE data on 25 June.
Wall Street closed mixed (Dow +0.29%; S&P -0.37%; Nasdaq -1.33%), as weakness in megacap technology stocks offset optimism from easing Middle East tensions. Alphabet fell 5.2% on reports of a senior AI researcher departure, while Broadcom (-4.7%), Amazon (-4.4%), Microsoft (-3.2%) and Meta (-2.7%) also declined amid broader tech pressure. SpaceX dropped 16.4% following a new bond issuance, while Micron rose 6.8% after announcing a strategic partnership with Anthropic.
After gaining 36.5 pts over seven straight sessions, the KLCI slipped 11.2 pts (-0.65%) to close at 1,700.8, mainly dragged by profit-taking in banking and O&G counters. Broader sentiment was dampened by MAYBANK on negative headlines
over an investigation linked to its Indonesian unit’s corporate customers, and PCHEM amid persistent concerns over global petrochemical oversupply and weak margins as Middle East tensions eased.On fund flows, local retailers emerged as major net buyers (+RM67m; 5-day rolling: – RM240m; MTD: +RM232m). In contrast, foreign investors (-RM29m; 5-day rolling:- RM40m; MTD: -RM1.74bn) and local institutions (-RM38m; 5-day rolling: +RM280m; MTD: +RM1.51bn) were major net sellers.
The KLCI is likely to remain in a range-bound consolidation phase as it continues to struggle with a decisive breakout above the key downtrend resistance near 1,720. A clear break above 1,720 would confirm the continuation of the recovery from the recent 1,673 (1-month low), opening the door toward 1,732 (10% FR) and 1,750. Conversely, failure to breach resistance would likely extend the consolidation phase, with immediate support at 1,692 (MA20), followed by 1,681 (23.6% FR), and stronger support at 1,672 (MA200).
The KLCI could trend higher on easing geopolitical risks and softer oil prices tailwinds, but gains may remain capped by lingering uncertainty over the economic spillover from a 4-month conflict and a more hawkish Fed policy outlook.
Domestically, sentiment remains constrained by a weaker ringgit (-7% from its YTD low of RM3.88), persistent foreign outflows, and rising political risk premiums ahead of the Johor (11 July) and Negeri Sembilan (1 August) state elections, alongside ongoing speculation of an early GE16 (due February 2028). These headwinds are likely to cap near-term upside, with strong resistance seen at 1,732–1,750.
