Southeast Asian Markets Drop on Oil Spike and Middle East Tensions

Malaysia's FBM KLCI index stalled for a second session before slipping 0.5% as oil prices topped US$95 a barrel and concerns over aggressive AI‑related capital spending dented market sentiment. Technology stocks led the rally earlier, but profit‑taking and uncertainty ahead of the U.S. Federal Reserve policy meeting shifted focus to energy and industrial sectors.

The Malaysian ringgit opened weaker against the U.S. dollar, reflecting broader dollar strength and higher oil prices. Analysts noted the currency’s resilience thanks to strong trade terms and Malaysia’s status as an energy exporter, though expectations of a September Fed rate hike remain.

In Indonesia, the rupiah was projected to weaken amid escalating Middle‑East geopolitical tensions that lifted global oil prices, but the finance minister said the currency should regain strength later as export‑derived foreign‑exchange inflows are placed domestically, supporting the market.