Asian bourses retreated, led by losses in Taiwan (-1.86%), South Korea (- 1.84%), and Japan (-1.36%), as investors locked in gains on AI and semiconductor names after Broadcom-triggered weakness across the global chip sector. Risk appetite was further undermined by escalating US–Iran hostilities and ongoing skirmishes across the Mideast, diminishing hopes of a near-term diplomatic breakthrough.
Ahead of tonight’s key nonfarm payrolls release, the Dow (+1.73% to 51,562) and S&P 500 (+0.41% to 7,584) closed at record highs, while the Nasdaq slid 1.36% to 30,407. The divergence reflects a rotation out of AI-driven technology leaders into more cyclical, “old economy” sectors that stand to benefit from a resilient growth backdrop, following Broadcom’s softer-than-expected outlook. Meanwhile, Brent crude fell 2.8% to ~USD95/bbl, as optimism over a potential US–Iran de-escalation, supported by a conditional Israel–Lebanon ceasefire.
The KLCI staged a long-awaited 10.5-pt technical rebound to 1,683.3 after sliding ~95 points from its one-month high of 1,768, supported by bargain hunting in selected heavyweight banking, utility and O&G stocks. Sentiment improved after the Prime Minister ruled out a snap GE16 in the near term, reaffirming that the government’s priority remains on ensuring national stability and driving economic recovery ahead of the upcoming Johor and Negeri Sembilan (will be dissolved today) state polls.
Foreign funds remained heavy sellers (-RM367m; 5-day: -RM3.22bn; June MTD: – RM821m), extending its 15 consecutive net outflow of RM4.61bn. In contrast, local institutions (+RM288m; 5-day: +RM2.66bn; June MTD: +RM610m) and retail investors (+RM79m; 5-day: +RM564m; June MTD: +RM211m) emerged as major buyers.\
Despite yesterday’s oversold rebound, the KLCI remains trapped in a corrective phase following the formation of a Double Top, a break below key MAs (20/30/50-day) as well as its rising trendline. Immediate support is seen at the MA200 (1,667), with a decisive breach likely to accelerate downside towards 1,650, 1,625 (38.2% FR) and 1,600.
On the upside, a strong relief rally in the coming days to reclaim the 1,700–1,720 resistance zone would be needed to negate the current downtrend and pave the way for the next leg of recovery towards the 1,730–1,750 region.
Amid prevailing Middle East tensions and risks surrounding the Strait of Hormuz, the KLCI is likely to remain in a range-bound consolidation phase. Sentiment is weighed by geopolitical growth concerns, a softer 1Q26 earnings season marked by cautious
guidance, and persistent foreign fund outflows.
Meanwhile, the political risk premium has edged higher despite the PM’s remarks ruling out a near-term GE16 ahead of the looming Johor and Negeri Sembilan state elections. This has fuelled concerns over broader political stability, including potential spillover from state polls and lingering speculation of an early GE16 (due only in Feb 2028)
