Market Review

MY: Given the stalling peace talks between the US and Iran, which led to a rebound in oil prices, the local bourse snapped its one-day gain yesterday. Sector-wise, all sectors traded in negative territory except Technology (+0.54%), with Construction (-1.93%) ending as the biggest decliner.

US: Wall Street closed slightly higher on Thursday as a pullback in US Treasury yields and strength in semiconductor stocks following Micron Technology’s upbeat earnings offset concerns over rising oil prices. The Dow, S&P 500 and Nasdaq advanced by 0.04%, 0.20% and 0.04%, respectively.

The Day Ahead

US: Despite the pullback in 10-year US Treasury yields, Wall Street may trade mixed amid the rebound in oil prices. Nevertheless, against this backdrop, we continue to favour Micron (MU) following its record 4QFY26 results and upbeat outlook, reinforcing expectations of sustained AI-driven memory demand. Management stated that more than 75% of its FY27 shipments are already committed, with customer allocation discussions shifting towards FY28. Given MU’s higher CapEx moving forward, semiconductor equipment suppliers such as Lam Research (LRCX) and Applied Materials (AMAT) could benefit as MU expands its manufacturing capacity and increases equipment spending.

MY: Tracking the rebound on Wall Street, we expect sentiment on the FBM KLCI to improve today. However, we believe investors will remain selective, focusing on potential beneficiary sectors and stocks ahead of the upcoming Budget 2027 announcement next Friday. Investors could look at (i) VITROX, which is seeing stronger demand for high-precision inspection solutions amid the structural shift towards AI infrastructure and advanced packaging, (ii) QES, following its expansion into China’s X-ray semiconductor inspection market, and (iii) HKB, which has a record-high order book of RM851m (~6.8x FY25 revenue) and could potentially benefit from infrastructure-related initiatives in East Malaysia under Budget 2027.