KUALA LUMPUR: The weakness in global markets, which has had a spillover effect on Bursa Malaysia, is expected to continue sapping investor confidence in equities.
The local benchmark, which was range-bound with a downward bias yesterday, opened 2.72 points lower at 1,488.89, reflecting the ongoing consolidation after a run-up in equities prices in early January.
"The weakness on Wall Street may permeate the sentiment on stocks across Bursa Malaysia today while the lower liners may consolidate with trading activities likely to taper off following the renewed volatility.
"At this juncture, we reckon that any recovery is likely to be tempered by quick profit taking activities," said Apex Securities Research in a note.
Investors' risk appetite has dwindled after recent US economic data pointed towards higher-than-expected inflation, tempering hopes the Federal Reserve will consider cutting lending rates as soon as in March.
Following the release of strong US retail sales data for December, the three major US indices continued their decline overnight. The Dow Jones slid 0.25%, while the S&P500 and Nasdaq shed 0.6% apiece.
For now, Apex said investor focus on the global front will pivot towards the release of US corporate earnings releases.
On Bursa Malaysia, the research firm advocated that investors remain defensive, while focusing on the utilities sector.
Malacca Securities Research, in its own report, said the negative sentiment on Bursa Malaysia could persist on fundamentally weak companies.
It said investors will turn to bargain-hunting activities in fundamentally strong companies, especially given several counters were seen hitting limit-down over the past two days.
"We expect the ongoing theme on the KL-SG HSR, coupled with the Johor-region catalysts may be the winners for 2024, thus trading activities could focus on the construction, property, building material as well as the utilities companies at least for the near term.
"Meanwhile, we like the defensive consumer sector as we think the overall consumption is stable and growing at this juncture," it added.
At the time of writing, blue chips were on the backfoot including CIMB down seven sen to RM5.96, Tenaga Nasional sliding 12 sen to RM10.32, and Public Bank falling two sen to RM4.33.
Top actives included Artroniq, diving 28.4 sen to 21 sen, Minetec rising 0.5 sen to 17.5 sen and Pestech gaining three sen to 33 sen.
