KLCI breaks below 1,600, markets routed as trade war rages

KUALA LUMPUR: The FBM KLCI fell below the critical support level of 1,600 in early trade, tracking the bloodshed on Wall Street overnight.

Global equities have been routed as the the trade war between the US and China intensified, with Washington designating China a currency manipulator.

Beijing allowed the yuan to fall to as low as 7.0 against the dollar on Monday following the latest imposition of US tariffs on its exports.

Following this, the US Treasury Department will engage with the International Monetary Fund to “eliminate the unfair competitive advantage” by China, it said.

At 9.07am, the FBM KLCI was down 17.55 points to 1,592.86, a level last seen in May 2019. Prior to that, the last time the index traded at these levels was in September 2015.

Market breadth was overwhelmingly bearish with 508 decliners, 31 gainers and 126 counters unchanged.

Kenanga research took note of the bearish sentiment in the stock market. Following the breach of the 1,600-points support, the research house pegged next support at 1,570.

Heavyweights seeing big losses included PPB dropping 44 sen to RM18.20, Hong Leong Bank falling 34 sen to RM17.32 and Public Bank sliding 20 sen to RM21.36.

Elsewhere in the region, Japan’s Nikkei Index was down 2.3% while South Korea’s Kospi Index fell 1.7%.

Other markets that are yet to open are expected to be similarly bearish.

In oil markets, Brent crude prices plunged over 3% overnight to below the US$60 a barrel mark but slowed its slide coming into Tuesday.

Brent slid a further four cents to US$59.77 a barrel and US crude dropped 10 cents to US$54.59 a barrel.

Source: TheStar