Tracking Wall Street’s rally, Asian markets ended higher but remained cautious as investors awaited Friday’s US NFP data for fresh clues on the Fed’s policy path. Sentiment was boosted by dovish comments from Christopher Waller, who said he was “inclined to support” keeping rates steady if inflation continues to show signs of disinflation, overshadowing elevated Brent prices near USD96 amid renewed USIran tensions and concerns over energy flows through the Strait of Hormuz. Meanwhile, SHCOMP slipped 0.3% as investors watched upcoming trade and inflation data, after the latest PMI surveys pointed to modestly improved economic momentum.
Ahead of the Labour Day holiday on 7 Sep, Wall Street snapped its two-day rally (Dow -0.51%, S&P 500 -0.38%, Nasdaq -0.29%) as strong August jobs data boosted expectations for a Sep Fed rate hike. Nonfarm payrolls surged 162k—far exceeding
the 55k consensus—while unemployment held at 4.1% alongside upward revisions. Markets now turn to upcoming CPI and PPI reports for policy direction. Additionally, the preliminary September University of Michigan Consumer Sentiment Index is
expected to reflect persistent consumer pessimism.
Bucking Wall Street and regional positive cues, the KLCI slipped 7 pts to 1,708.1, weighed by profit-taking in plantation, banking and healthcare heavyweights, while political uncertainty kept investors cautious. Political risk remained in focus after PMX said calls for an earlier general election would be considered, while stressing priorities of economic recovery, improving livelihoods and tackling corruption.
Foreign institutions remained net sellers for a 4th straight session in September, following heavy net selling of RM1.98bn in August (-RM21m; 5D: -RM878m; MTD: – RM640m; YTD: -RM5.10bn), alongside local institutions (-RM90m; 5D: +RM146m;
MTD: +RM119m; YTD: +RM5.02bn). Retailers, however, remained net buyers for the 6th straight day (+RM111m; 5D: +RM733m; MTD: +RM521m; YTD: +RM0.08bn).
After rallying 95 pts from its YTD low of 1,655 on 29 Jun to 1,753 (26 Aug’s high), the KLCI retreated 57 pts to 1,696 before closing at 1,708.1 last Friday, above the MA200 (1,699). The technical picture remains range-bound, with the index hovering near the descending trendline. A decisive break below 1,699 and 1,685 (50% FR) would reinforce downside risk towards 1,655 (YTD low) and 1,639 (23.6% FR). Conversely, a breakout above the trendline and 1,730 (76.4% FR) would negate the bearish setup, opening the way towards 1,753 and 1,771 (YTD high).
Mirroring Wall Street’s retreat last week, HLIB said the KLCI could face further choppy trends this week amid persistent external and domestic headwinds. Externally, renewed escalation in Middle East, hawkish Fed rhetoric, and elevated US yields and oil prices could sustain foreign capital rotation away from EMs. Domestically, potential 2H earnings disappointments amid a higher-for-longer cost environment, the KLCI expansion overhang and emerging GE16 political jitters could further temper upside.
