Asian equities retreated as investors took profits in semiconductor stocks despite Samsung’s blockbuster earnings, reflecting growing concerns that AI-driven earnings growth may no longer justify lofty valuations. Meanwhile, renewed Middle East tensions lifted oil prices and added to risk aversion after Tehran reportedly fired at commercial ships in the Strait of Hormuz, while attention shifted to upcoming Fed minutes and key regional economic data.
Wall St (Dow -0.25%, S&P 500 -0.45%, Nasdaq -1.16%) closed lower overnight as a tech rout overshadowed another record intraday high of 53,289 for the Dow. Sentiment weakened amid persistent concerns over lofty AI spending despite Samsung’s strong earnings, while reports that China’s DeepSeek is developing its own AI chip added gurther pressure. Meanwhile, the 10-year Treasury yield climbed 8 bps to 4.55%, while Brent crude surged ~3% to around US$74/bbl, further weighing on risk appetite.
After a ~29-pt technical rebound from the YTD low of 1,655 (29 Jun) to 1,683 (6 Jul), the KLCI retreated as much as 6.6 pts on profit taking before recovering to close marginally lower at 1,682.9 (-0.6-pt). Market breadth remained weak at 0.71
(vs 0.65 prior), while turnover stayed subdued at 2.69bn (5-day average 2.68bn) shares worth RM2.05bn (5-day avg RM1.99bn), reflecting investor caution ahead of the Johor (11 Jul) and Negeri Sembilan (1 Aug) state elections, which could shape GE16 expectations.
Foreign investors resumed net selling at RM2m (5-day: -RM365m, MTD: -RM365m, YTD: -RM3.5bn) alongside local institutions (-RM41m, 5-day: +RM172m, MTD: +RM172m, YTD: +RM3.1bn) and proprietary traders (-RM2m, 5-day: +RM67m, MTD:
+RM67m, YTD: +RM700m). In contrast, local retailers emerged as largest net buyers totalling RM45m (5-day: +RM126m, MTD: +RM126m, YTD: -RM274m).
The KLCI is showing signs of bottoming after rebounding from its YTD low of 1,655, following a 6.4% pullback from the two-month high of 1,768. Improving momentum points to a near-term recovery above the key MA200 (1,677), while a break above
1,704 (MA50) would confirm a medium-term uptrend, targeting 1,713 (upper Bollinger Band), 1,733 (10% FR) and 1,745 (rising long-term trendline). Key supports are at 1,677, 1,663 (weekly lower BB) and 1,650.
The KLCI may remain volatile amid the Johor polls on 11 Jul, renewed Middle East tensions following US strikes on Iran, and tonight’s June FOMC minutes. Persistent foreign outflows and rising political risk premium from early GE16 speculation are likely to prolong the index’s consolidation phase.
