KUALA LUMPUR (Aug 25): Malaysian technology stocks rose on Monday to their highest in six months, tracking a broad rally in Asia amid rising optimism for US monetary easing next month.

The Bursa Malaysia Technology Index, which tracks 49 stocks in the sector, rose over 2% to its highest since Feb 24. Malaysian Pacific Industries Bhd (KL:MPI) rose as much as 9% or RM2.72 to RM27.74, as investors shrugged off concerns over weaker earnings.

The dovish tone of the US Federal Reserve’s (Fed) chair Jerome Powell is fuelling expectations for a rate cut in September, supporting equities and encouraging capital inflows into emerging markets, which could in turn boost the ringgit and Malaysia’s growth-oriented sectors, said Apex Securities in a note.

At the Jackson Hole symposium, Powell said the economic outlook "may warrant adjusting the policy stance”, a remark that economists and investors say signal a possible rate cut in September.

Sentiment was also boosted by last Friday’s gains of the Magnificent Seven, a group of seven high-growth US technology stocks comprising Alphabet, Amazon, Apple, Broadcom, Meta Platforms, Microsoft, and Nvidia.

Lower interest rates tend to boost technology stocks, making capital cheaper for companies with heavy capital expenditure. Investors also tend to shift into riskier assets seeking higher returns, boosting valuations of growth stocks.

Investors however should watch out for major earnings by Nvidia on Aug 27, a key event that could spark another rally of artificial intelligence related stocks if results surpass expectations. Other notable earnings due soon include CrowdStrike, HP, Snowflake and Alibaba, the house noted.