KUALA LUMPUR, July 21 (Bernama) -- Bursa Malaysia’s key index closed marginally lower on Tuesday, weighed down by continued profit-taking, although the positive market breadth indicated that selective buying interest remained intact. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 1.92 points, or 0.11 per cent, to close at 1,720.37 from Monday's close of 1,722.29. The index opened 3.33 points higher at 1,725.62, and moved between 1,712.66 and 1,726.88 throughout the day. On the broader market, advancers beat decliners 579 to 512, while 539 counters were unchanged, 1,105 untraded, and 12 suspended. Turnover increased to 3.48 billion units valued at RM2.79 billion from 3.27 billion units valued at RM2.21 billion on Monday.
Summary
Asian equities surged after Japan’s stock market soared to a fresh all-time high, driven by political clarity and expectations of aggressive reflation policies, while a late rebound on Wall Street and renewed hopes of US rate cuts further boosted risk appetite.
What’s Driving the Rally
Markets across Asia rallied after a decisive election win by Japanese Prime Minister Sanae Takaichi, which secured a strong parliamentary mandate and cleared the way for more fiscal spending and tax cuts.
Japan’s Nikkei jumped 4.2% to a record high
MSCI Asia-Pacific (ex-Japan) rose 1.0%
South Korea’s tech-heavy index climbed 3.9%
Investors interpreted the result as an endorsement of reflationary “Sanaenomics”, including:
Possible food consumption tax cuts → supportive for domestic demand
Higher defence spending → positive for defence-related stocks
Wall Street Relief Rally Adds Momentum
Sentiment was also lifted by a sharp rebound in US equities late last week:
S&P 500 futures +0.4%
Nasdaq futures +0.6%
US chip stocks led the bounce:
Nvidia +8%
Advanced Micro Devices +8%
Broadcom +7%
Fed Rate Cut Expectations Back in Play
Markets are increasingly pricing in a US Federal Reserve rate cut by June, supported by expectations of softer economic data ahead:
Payroll growth expected to slow
Inflation forecast to ease slightly to 2.5%
Retail sales seen growing at a moderate pace
Key balance: Data must be weak enough to justify rate cuts, but not so weak as to threaten earnings.
Rotation Theme Emerging
Analysts note a broader shift in positioning:
From AI spenders to AI beneficiaries
From services to manufacturing
From US-centric trades to global rebalancing
This comes amid lingering concerns over whether the US$650 billion in AI capex planned by the world’s largest tech firms will deliver sufficient returns.
Currencies & Commodities
Yen weakened to around 157 per dollar as investors sold Japanese bonds in anticipation of debt-funded stimulus
Silver rebounded 2.4% after extreme volatility last week
Gold rose 1.5% to about US$5,033/oz
Oil prices slipped as US–Iran talks failed to ease geopolitical risks
Bottom Line
Japan is once again the engine of Asia’s market rally.
A powerful political mandate, reflation hopes, easing global financial conditions, and renewed Fed cut expectations have combined to push Asian equities higher — with Japan firmly back in the global spotlight.
Key Takeaways
Japan stocks hit record highs on reflation optimism
Asia benefits from Wall Street rebound and Fed cut bets
Rotation away from AI capex risk toward broader global exposure
Volatility remains high in commodities and FX
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