KLCI Set to Extend Rally as Trump Cancels Iran Strike - Stocks to Watch
August opens with two major headlines that could set the market's direction this week: President Trump cancelled a planned strike on Iran, and two US tech giants - Amazon and Microsoft - delivered impressive quarterly results. Together, these two factors position Wall Street to kick off the August trading month on a positive note.
For Malaysian investors, the question is: will this momentum spill over to Bursa Malaysia? According to M+ Global's strategy note dated 3 August 2026, the answer leans towards yes - the FBM KLCI has room to extend its gains today, particularly in the Technology sector.
In this update, we break down what happened on Wall Street, why it matters for the local market, and the counters in focus today.
Quick Summary
- Geopolitics: Trump cancelled the planned strike on Iran after the parameters of a deal were reached - including the full reopening of the Strait of Hormuz
- Wall Street: Amazon and Microsoft reported stellar results; AWS grew at its fastest pace in 18 quarters
- AI theme: Amazon's 2026 CapEx raised from USD200 billion to USD220 billion - positive for memory chips, DC infrastructure and power providers
- KLCI: Positioned to extend gains, with Technology in focus
- Counters in focus: HSSEB (RM2.1 billion order book) and MSC (breakout, tin recovery)
Trump Cancels Iran Strike - Geopolitical Risk Recedes
Over the weekend, President Trump announced the cancellation of a planned strike on Iran after the basic parameters of a deal emerged. According to CNBC, the framework includes the full reopening of the Strait of Hormuz - the world's most critical oil shipping lane - and an end to Tehran's nuclear programme.
The decision followed requests from several Middle Eastern countries, including Saudi Arabia, as reported by Axios. For markets, the implication is clear: the threat to Gulf energy infrastructure and shipping lanes has eased, pressure on oil prices is receding, and global risk appetite is recovering.
US-Iran tensions were among the key factors weighing on global markets - we covered the impact in our earlier Wall Street market wrap. This cancellation effectively removes a major overhang from market sentiment.
Why Does the Strait of Hormuz Matter So Much?
The Strait of Hormuz is the narrow passage between the Persian Gulf and the Arabian Sea through which a large share of Gulf oil and LNG exports flow. Any disruption to this route raises energy and shipping costs worldwide - and Malaysia, as an open trading economy, feels it through fuel prices, import costs and ringgit movements. That is why the commitment to fully reopen the Strait of Hormuz under this framework was welcomed by regional markets, not just Wall Street.
Amazon & Microsoft Results Energise Wall Street
The second factor supporting sentiment: a stellar Big Tech earnings season.
Amazon reported second-quarter 2026 revenue of USD200.6 billion, up 20 percent year-on-year, as reported by CNBC. The real star was AWS - Amazon's cloud arm - which grew around 37 percent, its fastest pace in 18 quarters. AMZN shares jumped around 7 percent in after-hours trading following the announcement.
Microsoft was no less impressive - USD90 billion in revenue (up 18 percent) with Azure growth of around 39 percent, according to Microsoft's official investor relations. Both results confirm one thing: demand for AI and cloud infrastructure is nowhere near its peak.
Amazon's CapEx Raised to USD220 Billion - Who Benefits?
This is the part that matters most for technology investors. Amazon raised its 2026 capital expenditure guidance from USD200 billion to USD220 billion, as reported by Seeking Alpha. Part of the increase reflects higher memory chip costs alongside continued investment in AI infrastructure.
According to M+ Global's analysis, this giant spending stream will directly benefit several groups of companies:
- Memory chip manufacturers - memory demand for AI servers keeps surging, and higher memory costs point to pricing power on the producers' side
- Data centre (DC) infrastructure providers - construction, cooling, electrical systems and networking
- Power providers - every new data centre needs a large, stable electricity supply
This theme is familiar territory for Bursa Malaysia - the local data centre ecosystem, from contractors to utility providers, has been a major investment theme for the past two years.
Copper Is Back: SCCO in Focus for US Traders
Beyond Big Tech, M+ Global also suggested traders look at Southern Copper Corporation (SCCO) in the US market, driven by the recovery in copper prices and structural demand from two megatrends: AI and global grid electrification.
The logic is simple - data centres, electric vehicles and grid upgrades all require copper in huge quantities. For investors with access to the US market, commodity counters like SCCO offer exposure to this theme without trading commodities directly.
KLCI Positioned to Extend Gains - Technology in Focus
Back to the local market. With Wall Street rallying and geopolitical risk receding, M+ Global expects the FBM KLCI to have room to extend its gains today, with the Technology sector expected to lead.
This makes sense from a sentiment-flow perspective - Malaysian technology stocks (especially the semiconductor and electronics assembly chain) have historically moved in tandem with the Nasdaq and the global AI spending theme. When Amazon lifts CapEx to USD220 billion, the supply chain in Penang and Kulim feels the ripple.
The financial sector should not be ignored either - the presence of banking counters in today's watch list reflects the expectation that risk-on sentiment and returning fund flows into regional markets typically land first in liquid large-cap names like banks, before spreading to smaller counters.
Counter in Focus 1: HSS Engineers (HSSEB)
M+ Global's top pick for today is HSS Engineers Berhad, an engineering and infrastructure consultancy firm. Three key reasons were given:
- RM2.1 billion order book - providing multi-year earnings visibility
- Structural domestic tailwinds - public transport, water infrastructure and domestic data centre projects
- Earnings acceleration from overseas contracts - including the Baghdad Metro JV contract worth RM1.5 billion
The combination of a thick domestic order book and sizeable international contracts puts HSSEB in an attractive position for investors seeking exposure to the infrastructure cycle.
Counter in Focus 2: Malaysia Smelting Corporation (MSC)
The second pick is Malaysia Smelting Corporation, one of the world's largest integrated tin producers. The catalysts: a recovery in global tin prices, plus a technical breakout from a consolidation phase in the share price.
Tin is a critical commodity in electronics soldering - meaning the global AI and electronics theme also supports its long-term demand. For traders who like a combination of fundamental and technical catalysts, MSC is one to watch today.
Full Stocks to Watch List Today
Here is M+ Global's full watch list for the 3 August 2026 session, by sector:
| Sector | Counters |
|---|---|
| Technology | INFOM (Infomina), MPI (Malaysian Pacific Industries), NATGATE (NationGate), OGX (OGX Group) |
| Financial | AMBANK (AMMB Holdings), CIMB (CIMB Group) |
| Construction | CHB (Critical Holdings), HEGROUP (HE Group) |
| Medical | SCOMNET (Supercomnet Technologies) |
| Utility | RANHILL (Ranhill Utilities) |
| Consumer | SPRITZER (Spritzer) |
Notice that the list leans towards the themes discussed above - technology and construction counters exposed to the data centre chain (INFOM, NATGATE, CHB, HEGROUP), semiconductor producers (MPI), and utilities supplying the basic needs of DC projects (RANHILL).
What Should Investors Take Note Of?
A few important notes before you act on this information:
First, sentiment can turn quickly. The US-Iran framework is still at an early stage - Trump himself made it contingent on a "rapid" deal. If negotiations stall, geopolitical risk can return in an instant, and so can the pressure on markets.
Second, do not chase prices. Counters expected to rise on sentiment often gap up at the open. Experienced traders wait for a pullback or volume confirmation before entering, rather than buying into the morning excitement.
Third, a "stocks to watch" list is not a buy call. It is a watch list based on current catalysts. Do your own research - check each counter's fundamentals, technicals and news flow before making a decision. This update is for educational and informational purposes only, not investment advice.
Frequently Asked Questions (FAQ)
Why does cancelling the strike on Iran lift stock markets?
Conflict in the Middle East threatens global oil supply through the Strait of Hormuz, which can push up energy costs and global inflation. When that threat eases, uncertainty falls and investors regain the confidence to buy risk assets like equities.
What does Amazon's CapEx have to do with Malaysian tech stocks?
A large share of Amazon's capital spending flows into data centre construction - including memory chips, servers, cooling systems and electrical infrastructure. Malaysian companies in the semiconductor and data centre construction supply chain stand to benefit from this demand.
What is the FBM KLCI?
The FBM KLCI (FTSE Bursa Malaysia KLCI) is the benchmark index tracking the 30 largest companies on Bursa Malaysia. It is the main reference for measuring the overall performance of the Malaysian stock market.
Why are tin prices important for MSC?
Malaysia Smelting Corporation is among the world's largest integrated tin producers - its earnings move closely with global tin prices. When tin prices recover, MSC's margins can expand, making it a direct proxy for the commodity on Bursa Malaysia.
Is this stocks to watch list a guarantee of profit?
No. It is a watch list based on current catalysts and sentiment from M+ Global's strategy note. Share prices can move against expectations - risk management and your own research remain essential.
How can I get exposure to US stocks like Amazon or SCCO from Malaysia?
You can trade US stocks through a CDS account with global market access - platforms such as M+ Global allow Malaysian investors to buy shares in the US and Hong Kong markets from a single account.
Which sector is expected to lead the KLCI today?
According to the M+ Global note, the Technology sector is expected to lead the gains, driven by the Nasdaq rally and the AI infrastructure spending theme reinforced by Amazon's and Microsoft's results.
What is CapEx and why does it matter to investors?
CapEx (capital expenditure) is a company's spending on long-term assets such as data centres, plants and equipment. When a giant like Amazon raises CapEx, it signals confidence in future demand - and that money flows to suppliers along the chain, some of which are listed on Bursa Malaysia.
What is the Strait of Hormuz and why are markets sensitive to it?
The Strait of Hormuz is the world's key oil shipping lane between the Persian Gulf and the Arabian Sea. Any threat of closure can send global oil prices sharply higher, lifting inflation and pressuring equity markets - which is why Hormuz-related news always moves markets.
Conclusion
August opens with a rare combination: receding geopolitical risk alongside confirmation that global AI spending is still accelerating. For Bursa Malaysia, this provides a supportive backdrop for further gains, particularly in technology and the data centre chain - but as always, positive sentiment must be balanced with disciplined risk management.
If you want to capture opportunities from market moves like these, the first step is having your own trading account.
Open a CDS trading account to invest in Bursa Malaysia as well as foreign stocks such as the US and Hong Kong markets - including counters like Amazon and SCCO discussed in this article.
New to investing? Download our Stock Market Basics Ebook for free to master the fundamentals before you start.