Bursa Malaysia rallies on ceasefire deal, analysts urge caution

KUALA LUMPUR: Bursa Malaysia rallied alongside other global markets as the two-week ceasefire in the Middle East brokered by Pakistan boosted investor sentiment.

The FBM KLCI, which fell for a fourth straight day yesterday, surged 11.65 points to 1,688.51, on the back of the deal, which could mark the initial stage of de-escalation in the war.

Elsewhere in the region, stock markets were jubilant; Japan's Nikkei jumped 4.86% to 56,029 and South Korea's Kospi soared 5.45% to 5,794. Australia's ASX200 climbed 2.63% to 8,958.

Brent crude dove over 12% to around the US$95 a barrel, its lowest level in nearly a month, on the prospect of oil supply returning via the Strait of Hormuz for the next two weeks, as per the ceasefire agreement.

The relief, however, could be shortlived as analysts are urging caution over excessively buying into the negotiations, which are tenuous and not guaranteed to lead to a permanent solution.

"The temporary pause, which Trump described as a 'double-sided ceasefire' remains conditional on Iran agreeing to reopen the Strait of Hormuz, highlighting the fragile nature of negotiations and the risk of renewed escalation should talks break down," said Apex Research in its review of the devleopment. 

The research firm also noted the unpredictability of the situation as Trump had earlier warned that “a whole civilization will die tonight” ahead of his Tuesday deadline to broker a deal.

"The abrupt shift from imminent military action to a conditional pause signals elevated headline risk with markets likely to remain sensitive to further developments, diplomatic responses from Tehran and any changes to the two-week timeline. 

"Against this backdrop, regional markets are likely to trade cautiously, with investors remaining defensive amid fragile negotiations and elevated geopolitical risk."

Apex also highlighted the breakdown of the bullish structure on the FBM KLCI's technical chart after the previous day's decline, which signals a shift in market sentiment following recent volatility.

It said immediate downside risk now pivots to the next support at 1,665, where a break below this level would reinforce bearish momentum and indicate sustained downward pressure in the near term.

For now, heavyweight banks were leading the blue-chip index higher, with Maybank rising 22 sen to RM11.38, CIMB gaining 22 sen to RM7.57, Public Bank climbing 12 sen ot RM4.72, RHB adding 13 sen to RM8.27 and Hong Leong Bank jumping 56 sen to RM22.06.

Airline AirAsia X rallied 10 sen to RM1.26 while sister company Capital A jumped three sen to 46 sen. 

Energy share Hibsicus Petroleum dove 27 sen to RM1.92, while Bumi Armada gave up 1.5 sen to 34 sen.