Asian markets closed mostly higher on Friday, tracking overnight gains on Wall Street as soft U.S. jobs data strengthened expectations of a Federal Reserve rate cut this month.

The Shanghai Composite Index gained 1.2%, buoyed by tech stocks and a ¥1 trillion liquidity injection from the People’s Bank of China. Japan’s Nikkei 225 climbed 1.0% after a U.S.–Japan trade deal eased auto tariffs and secured USD550 billion in investments.

In the U.S., however, the Dow Jones Industrial Average fell 220 points to 45,401 as August non-farm payrolls disappointed with only 22,000 jobs added, well below the 75,000 forecast. The unemployment rate rose to 4.3%, signalling a cooling labour market. Traders are now pricing in higher odds of a 50-basis-point rate cut at the Fed’s Sept 17 meeting.

On Bursa Malaysia, the FBM KLCI slipped 0.4 points to close at 1,579.2, trading within a narrow 1,576–1,581.9 range. Market breadth weakened with 2.32 billion shares changing hands, down 14% day-on-day, while turnover fell nearly 18% to RM2.30 billion.

Foreign investors turned net sellers, offloading RM109 million after a RM173 million net buy the previous day. Year-to-date, foreign outflows have reached RM16.68 billion, with August alone recording RM187 million in net selling. In contrast, local institutions and retailers emerged as net buyers, absorbing RM43 million and RM66 million respectively.

Outlook: Sideways Trading Before Malaysia Day

HLIB Research said the KLCI, having recovered from a recent low of 1,561.4 on Sept 2, is likely to trade sideways ahead of the Malaysia Day holidays (Sept 15–16). Investor focus will be on China’s trade data due Sept 8, the U.S. CPI print on Sept 11, and potential U.S. tariffs on Malaysian-made chips following comments by former U.S. President Donald Trump.

“Barring a decisive break below the 200-day moving average at 1,554, we maintain a constructive view on the KLCI, with expectations of a retest of the 1,600–1,640 range in September after a brief consolidation,” HLIB said in its trader brief.

Tailwinds Supporting the Market

The research house highlighted several factors that could underpin the local bourse, for instance, a potential Fed pivot: A widely expected U.S. rate cut in September could lift global liquidity and risk appetite. Earnings clarity: With the 2Q25 results season behind, focus is shifting to FY26 core earnings growth of 6.3%. Improving policy execution: The rollout of the 13th Malaysia Plan and investment momentum in data centres and renewables may drive real growth. And s resilient domestic support: Despite foreign outflows, local institutions (+RM14.72b YTD) and retailers (+RM1.96b YTD) continue to support the market.

The ringgit’s 5.7% year-to-date appreciation, coupled with undemanding valuations — CY26 price-to-earnings at 13.7 times versus a five-year mean of 17.2 times — and historically low foreign shareholding of 18.8% in August, could further bolster sentiment.

Technical Outlook

Technically, the index’s rebound from the Sept 2 low formed a bullish “Dragonfly Doji”, suggesting potential reversal if it sustains above the 1,554 support. A breakout above 1,587 would complete a rounding bottom formation, opening upside targets at 1,600, 1,615, 1,625, and 1,640.

“Conversely, a breakdown below 1,555 could reignite selling pressure, with next support at 1,535 and 1,521,” HLIB cautioned.

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