Sentiment on Bursa deteriorated sharply on July 3. The KL Composite Index opened lower and continued falling through the day as sellers overwhelmed buyers. Market breadth was deep in the red for the better part of the trading day.

There was little fresh development to bolster investor confidence. Sentiment in the global financial market remained weak. US stocks closed only marginally higher overnight after falling sharply in the previous week. Most regional markets also traded lower with selling pressure intensifying as the day progressed.

Crude oil prices remained near record high levels after the International Energy Agency warned that world production will remain tight in the longer-term. Investors also used heightened geopolitical tensions in the Middle East as reason to drive prices higher. Crude oil futures on the New York Mercantile Exchange stayed above US$142 (RM468.60) per barrel.

In addition to external concerns, investors are also getting increasingly nervous that the local political sabre-rattling appears to be gathering in intensity. Local political uncertainties are also likely to have prompted more foreign selling.

Market volume increased to over 485 million shares. This seems to suggest a slight increase in the pace of selling and does not bode well for the market's near-term outlook. We suspect those investors looking to bargain hunt will lean towards more defensive and high yielding stocks, for now.

The benchmark KLCI succumbed to increased selling pressure, falling deep into the red. It touched an intra-day low of 1,149.1 points before recovering a little to close 21 points lower at 1,153.7 points. Market breadth was also decisively negative. At the close, losing counters outpaced gaining ones by roughly eleven to two.

Top losers include Tanjong plc, KFC, TM International, Bursa Malaysia, IOI Corp, Parkson, UMW and YTL. Shares for Telekom Malaysia were the most actively traded for the day.