KUALA LUMPUR (April 7): The FBM KLCI closed 60.34 points or 4.01% lower at a 19-month low of 1,443.80 at the closing bell, rebounding from its steepest one-day drop since March 2008 — as escalating global trade tensions triggered a broad-based sell-off across regional markets.

The 30-stock benchmark fell as much as 85.09 points or 5.65% to 1,419.05 on Monday, before rebounding to 1,443.80.

Across Asia, major indices also posted heavy losses. Hong Kong’s Hang Seng Index led the regional rout with a steep 13.22% plunge, followed by Taiwan’s TAIEX that dropped 9.70%, while Japan’s Nikkei 225 dropped 7.83% to levels last seen in late 2023. Singapore’s Straits Times Index fell 7.66%, while China’s CSI 300 declined 7.05%. South Korea’s Kospi slid 5.57%, while the Philippines’ PSEi fell 4.30%

The sell-off came as global markets reacted to renewed concerns over tit-for-tat tariffs between major economies, adding pressure on an already fragile sentiment marked by sluggish global growth and stubborn inflation, according to analysts.  

US President Donald Trump announced a blanket 10% tariff on imports effective April 5 (Saturday) and reciprocal tariffs on countries with high trade surpluses with the US, which includes Malaysia, to take effect starting April 9 (Wednesday).

"The lack of immediate resolution to the trade dispute suggests that the risk-off sentiment could persist. Retaliation measures from China are expected to intensify global trade uncertainties," Apex Research said in a note on Monday.

The research house expects heightened volatility to persist throughout the week as investors digest the evolving US-China trade dynamics.

On Bursa Malaysia, the sharpest declines were seen among technology companies, with the Technology Index plunging 13.56%, followed by the Energy Index (-10.69%) and Construction Index (-8.84%), as investors dumped risk-sensitive counters amid rising uncertainty.

A total of 1,296 stocks declined, compared to 122 gainers, with 170 unchanged. The market was broadly negative, and trading volume surged to 5.35 billion shares, valued at RM4.67 billion.

Apex Research advised investors to stay defensive and closely monitor developments surrounding the tariff dispute, macroeconomic indicators, and central bank communications.

It added that while short-term rallies may occur in response to positive surprises, underlying uncertainty is expected to remain a key driver of market sentiment.

Separately, Hong Leong Investment Bank (HLIB) Research noted that while the announcement brought some clarity to the trade landscape, it also removed “a significant overhang” and may pave the way for renewed bilateral negotiations, potentially easing global market tensions.

"As US markets slump, Malaysia’s local bourse may face volatile times ahead, with tariffs and recession fears casting a long shadow," the research house said.  

“With the KLCI now trading at more attractive valuations, long-term investors may consider accumulating fundamentally strong stocks on weakness,” HLIB said.