Market Review

MY:. The local bourse traded on a cautious note last Friday, weighed down by heightened anxiety ahead of the key US consumer price index report. Sector-wise, Health Care (+0.49%) outperformed, led by the gloves counters, while Construction (-1.74%) lagged the most

US: Wall Street closed higher on Friday as a pullback in oil prices following reports of diplomatic de-escalation talks in the Middle East offset a hot consumer inflation report. The Dow, S&P 500 and Nasdaq advanced by 1.0%, 0.8% and 1.0% respectively, while the 10-year Treasury yield reached 4.974%.

The Day Ahead

US: Positioning ahead of the September 15–16 FOMC meeting, coupled with oil prices staying above USD104, we expect Wall Street to trade cautiously. Stock-wise, we favour Vertiv Holdings, a direct beneficiary of continued data centre CapEx scaling by major hyperscalers, driving demand for its liquid cooling units and power distribution architectures. Lastly, with markets pricing in an 87.3% chance of a 25bps rate hike at the upcoming FOMC meeting (vs 59.4% a week ago), selected financial stocks could remain in focus amid expectations of a higher-for-longer rate environment, including Citigroup, Morgan Stanley, and Goldman Sachs.

MY: With global markets focusing on the FOMC meeting and BoJ interest rate decision this week, alongside a shortened local trading week, we expect the FBM KLCI to remain cautious. Glove counters have regained buying interest, underpinned by higher ASPs from Chinese glove makers and stronger ASP projections amid rising raw material and coal prices. This should raise Chinese production costs and reduce aggressive price cuts, easing price-war pressure on local glove counters. However, as valuations are elevated, traders are encouraged to trade on pullbacks. Lastly, we like PENTECH, which is seeing strong growth in cloud and managed services and should benefit from ongoing enterprise digitalisation.