The FBM KLCI (-1.23%) dropped to 1,679.92 pts with renewed expectations of a more hawkish Federal Reserve which kept market breadth negative. Plantation (+1.25%) outperformed, led by KLK (+68.0sen) and UTDPLT (+100.0sen), while Technology (-1.01%) lagged the most amidst the global tech selloff.
As for U.S. equities, they fell sharply on Tuesday as a sweeping, tech-led selloff erased the recent market momentum. The Nasdaq (-2.21%), S&P500 (-1.44%) and Dow (-0.09%) pulled back. Brent crude traded around $77/bbl as geopolitical risk premiums have eased as US-Iran relations improved.
Following the sell-off in US tech counters, Malacca Securities expects Wall Street to trade cautiously in the near term while observing Micron’s results later today and Core PCE inflation data tomorrow. Stock-wise, we favour both Flex Ltd (FLEX) and MACOM Technology Solutions (MTSI); the former officially joined the S&P 500 two days ago, while the latter is riding the data centre boom through its 1.6Tb and 3.2Tb optical solutions. Lastly, we also like the pullback shown by Bloom Energy (BE), supported
by its USD20bn backlog following surging energy demand from AI data centres, which require rapid on-site power solutions.
Malacca Securities said it expects the negative trading tone on the FBM KLCI to persist today, with tech stocks experiencing a dip following two consecutive days of sell-downs on the Nasdaq. Meanwhile, with the upcoming El Niño weather conditions, buying interest is expected to persist in cocoa and plantation counters, benefitting GCB, KLK, and UTDPLT, while the fall in crude oil prices is expected to benefit airline companies such as AAX. Lastly, we favour both SUNMED and EMPIRE; the former is staging a recovery after being oversold since the end of March, while the latter benefits from its ongoing network expansion plan.
As the FBMKLCI slipped, its technical indicators are also suggesting mixed signals at this current juncture, with the MACD histogram tilted toward the positive region, while RSI is hovering below 50. Resistance is seen around 1,694–1,699, with support at 1,659–1,664.
