FBM KLCI Extends Gains as Tech Stocks Rebound

The FBM KLCI rose 0.17% to close at 1,602.27 on Wednesday, extending its gains for a second consecutive session as late buying interest lifted the benchmark back above the 1,600 psychological level. Market breadth turned positive, with 626 gainers outnumbering 416 decliners, while 502 counters were unchanged. Tech stocks rebounded.

Technology (+2.84%), Construction (+1.64%) and Property (+1.16%) were the top-performing sectors. Consumer Products & Services (-0.34%), Healthcare (-0.25%) and Energy (-0.20%) were the main laggards.

Wall Street rallies on AI optimism

Wall Street closed higher overnight, with the Nasdaq Composite up 1.05% to 26,702.86, the S&P 500 gaining 0.58% to 7,757.17 and the Dow Jones Industrial Average advancing 0.69% to 52,856.09. Technology stocks led the rebound after SpaceX reported 161% year-on-year revenue growth in the third quarter, renewing optimism towards AI-related investments. SpaceX surged 7%, while Nvidia and AMD gained more than 2% and 3% respectively.

Concerns over the sustainability of AI spending remain, however, with investors awaiting earnings from Tesla and Meta for further insights. U.S. Treasury yields were broadly steady, with the 10-year yield at 5.12% and the 30-year at 5.43%. In Europe, the STOXX Europe 600 rose 0.92%. Asian markets closed mostly higher, led by South Korea’s KOSPI, which jumped 3.29%, and Japan’s Nikkei 225, which rose 0.85%, while Hong Kong’s Hang Seng Index fell 0.90%.

Recovery remains fragile

The index’s return above 1,600 may offer some near-term relief, but the rebound remains vulnerable amid persistent foreign selling and fragile sentiment. Elevated oil prices and geopolitical uncertainties continue to pose risks to inflation and corporate earnings, while investors are likely to stay cautious ahead of the Federal Reserve’s interest rate decision on 29 October (Malaysia time), which could sway global risk appetite and foreign fund flows into emerging markets.

Renewed optimism towards AI-related stocks could support regional technology sentiment, with earnings from major technology companies remaining a key catalyst. Domestically, resilient economic growth and more attractive valuations after the recent correction may encourage selective bargain-hunting in fundamentally sound blue chips. A sustained recovery, however, will depend on improving market breadth and a moderation in foreign outflows.

Technology stocks may see renewed buying interest following the rebound in global AI-related shares, although doubts over the sustainability of AI investments could cap further upside. Construction stocks may remain in focus on continued data centre-related project opportunities, with contract flows and orderbook replenishment likely to support earnings visibility among selected contractors.

Tech Stocks

Technically, the FBM KLCI reclaimed the 1,600 level but remains below its EMA9, EMA20, EMA120 and SMA200, indicating that the broader downtrend is still intact. Immediate support is seen at 1,580, followed by 1,560, while resistance lies at 1,610 to 1,630. The index needs to hold above 1,600 to improve near-term sentiment, although continued trading below key moving averages suggests upside may remain limited.

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