Market Review

MY: Optimism surrounding the tabling of Budget 2027 lifted the local bourse higher last Friday, buoyed by gains in YTLPOWR and PMETAL. Sector wise, Construction (+2.30%) outperformed, led by GAMUDA and SUNCON, while Health Care (-0.75%) lagged the most.

US: Wall Street closed higher on Friday as a rebound in technology stocks and easing oil prices offset weak U.S. consumer sentiment and a sell-off in telecom shares following a SpaceX spectrum deal. The Dow, S&P 500 and Nasdaq advanced by 0.8%, 0.6% and 0.6% respectively.

The Day Ahead

US: With the S&P 500 near record highs following a 1.2% weekly gain, we expect Wall Street to trade cautiously ahead of Wednesday's September CPI release. Hotter inflation could revive rate-hike expectations at the October FOMC meeting, while major US banks kick off 3Q26 earnings season. Stock-wise, we favour Amazon (AMZN), supported by positive channel checks following Prime Big Deal Days and its USD220bn 2026 CapEx outlook for AI data centre expansion. This could also benefit Flex (FLEX), whose Axiom data centre power unit reportedly secured a USD2bn pre-spin investment at a USD37.5bn valuation. Traders may also consider Cisco (CSCO), supported by 17.6% revenue growth in 4QFY26 and its agentic AI rollout.

MY: We see limited risk of significant post-Budget 2027 profit-taking, as the FBMKLCI has already corrected over the past month amid surging US Treasury yields and uncertainty surrounding its potential expansion to 50 constituents. Post-Budget, we continue to favour Utilities, with TNB's RM15bn grid investment supporting transmission and distribution infrastructure, benefiting MNHLDG, SCGBHD and PWRWELL. Meanwhile, the RM2.5bn National NRW Reduction Programme, targeting 1,900km of ageing pipes, could benefit IAB. Lastly, higher STR and SARA allocations of RM16bn (2026: RM15bn) should bode well for 99SMART.