KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
Despite finishing the week slightly in the red, the S&P 500 may be primed for further upside — all thanks to the impending earnings season.
This Week in Markets:
S&P 500: -0.33%, closing at 6259.75 — still just off all-time highs
Nasdaq Composite: +0.22%, powered by NVIDIA’s record $4 trillion market cap
Dow Jones Industrial Average: -0.63%
These declines are modest, especially considering the escalating trade tensions — with tariff threats of up to 50% on Brazil and 35% on Canada — and continued political pressure on Fed Chair Jerome Powell. Remarkably, the S&P 500 remains up 26% from its April low and +6.4% YTD.
Valuation Watch:
The index now trades at 22.4x forward 12-month earnings — its highest multiple in 3 years. But rather than being a red flag, history shows these levels tend to precede gains, not losses. In the past five years, whenever the S&P traded at or above 22x, it returned an average of 4.6% over the next 3 months.
Earnings Season Outlook:
Analyst consensus expects:
Revenue Growth: +3.8% YoY (FactSet)
Earnings Growth: +5%, or $62.59 EPS
GDP Growth Estimate (Q2): +2.8% (Atlanta Fed GDPNow)
Inflation: Just above 2%
These expectations are modest, particularly given that earnings estimates have been revised down 4% since March, mostly in tariff-sensitive sectors like industrials and retail.
But this sets up for positive surprises. Historically, S&P 500 companies beat EPS estimates by ~5%, and Q2 may be no different. Deutsche Bank’s Binky Chadha sees the current setup as ideal for an average beat rate.
Key Catalysts to Watch:
Forward Guidance: The real swing factor.
Example: Conagra fell 4.3% on weak guidance.
Delta Airlines soared 12% on strong Q3 outlook.
AI Spend: Big Tech is still all-in.
Microsoft’s expected capex: $17.5B, up 26% YoY.
Boosts beneficiaries like NVIDIA, AMD, Broadcom, and data center builders.
“We’re still building AI with reckless abandon,” says Raymond James strategist Tavis McCourt.
Bottom Line:
Earnings momentum — not valuation — remains the dominant force. With AI investment firing on all cylinders and expectations set conservatively, the earnings season may give the S&P 500 the jolt it needs to resume its rally.
Investor takeaway: Stay positioned. As long as earnings hold, the valuation premium is not a ceiling — it’s the new normal.
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