Bucking a retreat in Wall Street last Friday, Asian markets ended mostly higher, led by rally in KOSPI (4.61%) and Taiwan (2.09%) as technology stocks rallied on renewed optimism over artificial-intelligence demand. Nevertheless, sentiment remained wary ahead of the China trade (8 Sep), US CPI (9 Sep) and US PPI (10 Sep) reports for policy direction.
Wall Street was closed overnight due to the Labour Day holiday. Last Friday, the US markets ended lower while bond yields stayed elevated as strong August jobs data boosted expectations for a Sep Fed rate hike on 16 Sep. This week, investors will
focus on CPI and PPI reports for policy direction, while the preliminary September University of Michigan Consumer Sentiment Index is expected to reflect persistent consumer pessimism.
Meanwhile, Brent crude rose to USD97, a six-week high, on expectations of prolonged tight supply after reports that Saudi Aramco facilities were hit in fresh attacks. A potential Iran-Oman tanker corridor could cap oil’s near-term upside, but with Hormuz traffic disrupted, supply risks remain firmly skewed to the upside.
In line with firmer regional markets and mild foreign inflows of RM60m amid persistent selling (-RM2.61bn since end-July), the KLCI rose 6.7 pts to 1,714.8, lifted by rotational buying in utility, plantation, telco and banking heavyweights. However,
market breadth remained negative at 0.80 vs 0.92 last Friday, while volume fell to 3.60bn shares (5-day average: 4.31bn) worth RM2.46bn (5-day average: RM3.32bn).
Local retailers remained net buyers for the 7th straight day (+RM85m; 5D: +RM379m; MTD: +RM606m; YTD: +RM0.165bn) alongside foreign institutions (5D: -RM580m; MTD: -RM580m; YTD: -RM5.04bn). In contrast, local institutions (-RM145m; 5D: –
RM26m; MTD: -RM26m; YTD: +RM4.87bn).
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 trending sideways to end at 1,714.8, above the key MA200 (1,700). The technical picture remains range-bound, with the index
hovering near the descending trendline. A successful 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). Conversely, a decisive break below 1,700 and 1,685 (50% FR) would reinforce downside risk towards 1,655 (YTD low) and 1,639 (23.6% FR).
In the near term, the KLCI could remain choppy despite strong support at the MA200, amid lingering headwinds as investors await US inflation data, the latest escalation in the US–Iran war now in its 7th month, and next week’s FOMC meeting, as elevated US yields 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
