Rising oil prices, AI fears cloud Bursa trajectory

By the Editorial Team · Wednesday, September 16, 2026

Bursa Malaysia's benchmark index fell 1.1% amid broad selling as investors reacted to the anticipated US Federal Reserve rate hike, rising crude oil prices, and a sell-off in AI-related stocks. This cautious sentiment reflects heightened inflation concerns and regulatory fears, suggesting the market may consolidate near current levels with potential bargains in select blue-chip stocks.

Bursa Malaysia is likely to face continued downward pressure in the near term as investors digest multiple factors including the upcoming decision by the US Federal Reserve, escalating crude oil prices linked to geopolitical tensions in West Asia, and a sell-off in artificial intelligence (AI)-related stocks.

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) dropped 18.8 points, or 1.1%, to close at 1,679.21 points on Monday, with broad-based selling observed across the local market. Market breadth reflected the cautious sentiment as 780 counters declined against 355 gainers, with 551 unchanged and 1,170 counters either untraded or suspended.

Bank Muamalat Malaysia Bhd’s chief economist Mohd Afzanizam Abdul Rashid highlighted that market sentiment is primarily influenced by growing expectations of a 25-basis-point interest rate hike by the Federal Open Market Committee (FOMC) following its two-day meeting concluding on Tuesday. In addition, rising crude oil prices driven by geopolitical uncertainties in West Asia have heightened concerns over inflationary pressures, which in turn may influence future monetary policy.

Brent crude futures hovered near a four-month peak of US$107.39 per barrel on Monday, intensifying worries about inflation and its impact on the global economic outlook. Concurrently, the US 10-year Treasury yield reached 5% for the first time since 2007, reflecting increased investor bets on a rate hike at the Fed’s upcoming meeting.

Thong Pak Leng, vice-president of equity research at Rakuten Trade Sdn Bhd, noted that Bursa Malaysia’s performance was tracking weaker regional and global markets, which have been affected by investor caution amid uncertain external factors. He also pointed out that fears surrounding AI safety and regulatory concerns contributed to recent declines in technology stocks.

With these uncertainties prevailing, Thong expects the FBM KLCI to remain in a consolidation phase within the 1,670 to 1,700 range for the remainder of the week. While selling pressure may persist, he suggested that stretched technical conditions could prompt bargain hunting in selected blue chips, particularly those offering attractive valuations and dividend yields after recent sell-offs.

Among the gainers on Monday, United Plantations Bhd rose 50 sen to RM33.60, MISC Bhd increased 14 sen to RM7.95, and Yinson Holdings Bhd added 13 sen to RM2.13. Panasonic Manufacturing Malaysia Bhd and Gas Malaysia Bhd each gained 12 sen at RM5.89 and RM5.05, respectively. On the losing side, Nestle (M) Bhd dropped RM1.12 to RM90.18, while Malaysian Pacific Industries Bhd, Eurospan Holdings Bhd, Press Metal Aluminium Holdings Bhd, and PETRONAS Gas Bhd fell between 20 and 30 sen.

The decline in Bursa Malaysia mirrors movements in other regional markets, where Thailand’s Stock Exchange dipped 0.8%, the Philippine Stock Exchange lost 1.1%, Singapore’s Straits Times Index fell 1.4%, and Indonesia’s stock market slipped 1.1%. The regional sell-off was exacerbated by concerns raised by senior US AI executives who called for a more cautious approach to AI development, prompting heightened investor risk aversion.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.