Market Review

MY: The local bourse traded on a cautious note sentiment was dragged by selling pressure within the banking heavyweights as JP Morgan downgraded selected banking stocks. Sector wise, Construction outperformed, led by GAMUDA and IJM, while Financials lagged the most.

US: Wall Street ended lower on Wednesday, with the Dow falling 0.7%, while the S&P 500 and Nasdaq each declined 0.2%, as elevated Treasury yields and the latest Fed minutes reinforced rate-hike concerns. The 10-year Treasury yield climbed as high as 5.36% before easing to 5.28%, while Brent crude settled at USD100/bbl.

The Day Ahead

US: Elevated Treasury yields and renewed rate-hike concerns could keep investors cautious, following FOMC minutes which showed that most participants assessed another rate increase would likely be appropriate by year-end. With the 10-year Treasury yield near 5.3%, defensive positioning could persist, although AI-related names with strong earnings visibility may remain resilient. FLEX stands out after raising its FY27 adjusted EPS guidance to USD4.42–4.74, implying 39% YoY growth at the midpoint, while its planned Axiom spin-off and USD2.0bn strategic investment further reinforce its AI infrastructure exposure. Meanwhile, Amazon (AMZN) could remain in focus ahead of the FCC’s 29 October vote on a proposal to advance a 25MHz spectrum auction to support direct-to-device satellite services.

MY: On the local front, we expect domestic equities to remain selective ahead of Budget 2027 on 9 October, with infrastructure and earnings visibility in focus. HKB could attract interest following a sharp 3QFY26 recovery, with revenue rising 93.4% YoY to RM49.5m and net profit reaching RM3.0m, while its order book has expanded to about RM851m. Meanwhile, JTGROUP offers fresh power infrastructure exposure after securing RM15.7m in TNB contracts for underground cable works and a submarine power cable monitoring system, bringing its unbilled order book to RM1.1bn.