Asian markets retreated sharply, led by Korea (-5.54%), Japan (-1.31%) and Taiwan (-1.29%), as investors rotated out of AI names into cyclicals following a Broadcom-led selldown. Rising yields on hawkish central bank signals, coupled with unresolved the US–Iran tensions and fragile ceasefires, further dampened sentiment. Liquidity was also siphoned by the anticipated SpaceX listing, triggering profit-taking in high-flying tech stocks and broad-based portfolio rebalancing
Meanwhile, JCI slid 8.7% WoW to multi-year lows amid political instability and policy uncertainty. Concerns over state intervention, sovereign rating risks and potential MSCI downgrade to Frontier Markets by end-June continued to weigh on sentiment. Wall St skidded (Dow -1.35%, S&P 500 -2.64%, Nasdaq -4.18%), while the US 10Y yield climbed 6 bps to 4.53%, as overheated technology stocks posted their steepest decline since April 2025. The sell-off was triggered by stronger-than-expected May nonfarm payrolls, which reignited concerns of a more hawkish Fed stance ahead of the 17 June FOMC meeting. This week, major attention turns to the May CPI and PPI releases, alongside the preliminary June Michigan consumer sentiment reading, given the unresolved US-Iran conflict and delays in the reopening of the Strait of Hormuz.
Over in Malaysia, the KLCI extended its relief rally for a 2nd day (+10.2 pts to 1,693.4) after plunging from 1,768 (1-month high) to a low of 1,673 (4 June), led by bargain hunting in selected heavyweights including MAYBANK, PBBANK, PMETAL, HLBANK, PETGAS and IHH. Sentiment was also supported by PM’s remarks ruling out a near-term snap GE16, reaffirming policy continuity and focus on economic stability amid persistent external and domestic headwinds.
Foreign funds remained major sellers (-RM226m; 5-day: -RM3.07bn; June MTD: – RM1.05bn), extending its 16 consecutive net outflows totalling RM4.83bn. In contrast, local institutions (+RM164m; 5-day: +RM2.56bn; June MTD: +RM774m) and retail
investors (+RM62m; 5-day: +RM515m; June MTD: +RM273m) retained as major buyers.
Despite rebounding 20.7 pts WoW, HLIB said the KLCI remains in a corrective phase after forming a Double Top and breaking below key MAs (20/30/50-day) and its rising trendline. Immediate support is at MA200 (1,667), with a decisive breach likely to accelerate downside towards 1,650, 1,625 (38.2% FR) and 1,600. As MACD shows fading downside pressure and RSI turns higher, the index may retest the 1,700–1,721 (MA20) zone. A decisive breakout above this level would negate the current downtrend and open the path towards the next recovery leg at 1,730–1,750
Amid persistent Middle East tensions and risks around the Strait of Hormuz, the KLCI is likely to remain in a range-bound consolidation phase. Geopolitical growth concerns weigh sentiment, a softer 1Q26 earnings season with cautious guidance,
sustained foreign fund outflows, and a proposed 10% US tariff on Malaysia and 59 of the economies over alleged forced-labour compliance issues, as Washington rebuilds its tariff agenda following recent legal setbacks.
Locally, political risk premiums have edged higher despite the PM’s reaffirmation ruling out a near-term GE16, with Johor and Negeri Sembilan prepare for snap polls. This has heightened concerns over broader political stability, spillover risks to other state polls, and lingering speculation of an earlier-than-scheduled GE16 (due Feb 2028).
