Asian markets mostly advanced on Friday as softer-than-expected US PPI further eased Fed hike expectations and extended the AI/tech rebound, with KOSPI jumped 2.4%, while Nikkei gained 0.6%. Hang Seng slipped 1.1% as JD.com plunged 10% on its first YoY revenue decline in over a decade. Brent held near US$88/bbl as stalled US-Iran talks and tougher US pressure on Tehran kept supply, geopolitical and inflation risks elevated.
Wall Street ended lower (Dow -0.20%, S&P 500 -0.17%, Nasdaq -0.28%) as weak retail sales and consumer sentiment raised concerns over a slowing US economy. July retail sales fell 0.6% MoM vs +0.1% consensus, while August consumer sentiment
slipped to 51 from 55.2, reinforcing the recent weak jobs and benign inflation data that have eased Fed hike expectations. Focus this week shifts to the July FOMC minutes, which should offer clues on the policy divide after three hawkish dissents at the ratehold meeting. Investors will also watch Walmart, Home Depot, TJX, Lowe’s and Target for signs of consumer resilience, alongside Analog Devices for AI investment trends.
Bucking firmer regional markets, the KLCI fell 7.3 pts to 1,727.4, extending its slide to six out of the past seven sessions as persistent foreign selling, the Hormuz deadlock, earnings-season caution and political noise kept sentiment subdued,
overshadowing a robust 6% 2Q26 GDP growth. Market breadth deteriorated, with 619 decliners versus 538 gainers, led by PMETAL, SDG, GAMUDA, IHH, CDB, SUNWAY and PBBANK. Foreign institutions remained heavy net sellers for 9 of the past 10 sessions (-RM182m; 5D: -RM624m; MTD: -RM1.06bn; YTD: -RM3.54bn). In contrast, local retailers (+RM77m; 5D: +RM269m; MTD: +RM255m; YTD: -RM0.57bn) and local institutions (+RM105m; 5D: +RM355m; MTD: +RM806m; YTD: +RM4.11bn) emerged as major net buyers.
After rallying 95 pts from its YTD low of 1,655 on 29 Jun to 1,750 on 6 Aug, the KLCI has entered a near-term correction, declining in six of the past seven sessions to 1,727.4 amid weakening momentum indicators. A decisive break below 1,720
(downtrend line) would expose downside risk toward 1,700. Conversely, a sustained breakout above 1,750 would signal renewed upward momentum, targeting 1,762 (weekly upper BB) and 1,771 (YTD high).
HLIB notes in its research that KLCI could remain range-bound as investors stay cautious amid persistent external and domestic uncertainties and a lack of fresh catalysts. The US-Iran deal impasse, peak August results season over the next two weeks and renewed foreign outflows are likely to cap upside
While DAP’s overwhelming vote to remain in the federal government should reinforce policy and coalition stability, political risk remains high following BN’s landslide Johor victory and strong BN-PN showing in Negeri Sembilan. Potential Melaka (term due
Dec 2026) and Sarawak (due Feb 2027) elections, uncertainty over GE16 timing (due Dec 2027), and closer BN-PN cooperation at the state level potentially paving the way for broader national alignment are likely to keep investors in risk-off mode.
