Asian markets slid, led by losses in Korea (7.9%), Japan (2.5%) and china (2.0%), as tech riot triggered a broad rotation out of AI-related names ahead of the US June non-farm payrolls report. The retreat was fuelled by mounting concerns that AI valuations had become overstretched after reports that Meta Platforms is exploring a cloud-computing business to monetise excess AI capacity, while Apple’s reported plans to source memory chips from Chinese suppliers CXMT and YMTC added to
fears of renewed US-China technology tensions.
Wall St ended mixed as downbeat June jobs data eased Fed hike fears, with investors rotated into blue-chip and defensive names instead of indiscriminately buying tech leaders. The Dow rose 1.14% to a record high, led by Apple, Visa and Walmart, while the S&P 500 was flat (-0.01%) and the Nasdaq fell 0.8% as semiconductor stocks extended their sell-off. AI and chipmakers remained under pressure amid stretched valuations and growing questions over the sustainability of AI spending, dragging down Micron, AMD, Nvidia, Applied Materials, KLA, Marvell and SanDisk.
After tumbling 112 points (6.3%) from its two-month high of 1,768, the KLCI staged a modest 5-point (0.3%) rebound to close at 1,661.8, supported by bargain hunting in MAYBANK, PBBANK, CDB, PCHEM, TM and MAXIS. However, market breadth deteriorated to 0.66 (vs. 1.17 previously), while trading activity remained subdued at 2.70bn shares (5-day average: 2.76bn) worth RM2.00bn (5-day: RM2.29bn), underscoring the lack of fresh catalysts and investors’ cautious positioning ahead of the closely-watched Johor (11 Jul) and Negeri Sembilan (1 Aug) state elections, as their outcomes could potentially influence the timing of GE16.
Foreign investors remained net sellers, offloading RM145m and extending their selling streak to eight of the past nine sessions (5-day: -RM574m; MTD: -RM275m). In contrast, local retailers were the largest net buyers at RM103m (5-day: RM7m; MTD:
RM10m), while local institutions added RM42m (5-day: RM567m; MTD: RM265m), marking their eighth consecutive session of net buying.
The KLCI is likely to remain in an extended consolidation after confirming a doubletop reversal and breaking below its rising trendline (1,733) and the key MA200 (1,676).
Unless the index decisively reclaims 1,676, 1,682 (MA20) and 1,705 (MA50), downside risks may persist, although losses should be cushioned near 1,652 (MA250) and 1,638 (MA280) as momentum indicators approach oversold levels. A sustained
break above 1,705 is needed to revive the medium-term uptrend, opening the way towards 1,733 and 1,754 (weekly upper BB).After falling 1.5% in 2Q, the KLCI is expected to remain choppy in July, as investors navigate easing US–Iran tensions, the potential re-escalation of trade frictions ahead of the 24 July expiry of S122 tariffs (with the USTR proposing a new 10% tariff under a S301 probe), and Fed hawkish expectations.
Domestically, persistent foreign outflows, a rising political risk premium amid the possibility of an early GE16, and uncertainty surrounding the proposed expansion of the FBM KLCI from 30 to 50 constituents (which HLIB expects to reduce the weightings of banking and utilities) are likely to keep the benchmark in an extended consolidation phase.
