Mild pullback signals with formidable hurdles at 1,620-1,642 due to overbought readings

KLCI: 1604.75 (-0.9)
DOW: 39056.39 (172.1)
MSCI Asia: 176.51 (-1.8)
FCPO (RM): 3884 (15)
BRENT (USD): 83.58 (0.42)
USDMYR: 4.7415 (0.003)
SGDMYR: 3.4974 (-0.003)
EURMYR: 5.0978 (-0.001)
AUDMYR: 3.1157 (-0.009)
GBPMYR: 5.9234 (-0.018)
US: 10-yr yield (%) 4.4937 (0.037)
BNM:10-yr yield (%) 3.905 (0)

Asia/US. Asian markets treaded cautiously as investors awaited Fed officials’ speeches for more cues on interest rates path, as well as major economic indicators the US and China. After rallying 1068 pts in five consecutive session, Dow climbed 172 pts to 39,056 as markets digested a slew of Fed officials’ comments for further insights into the interest rate outlook. On earnings front, Uber shares tumbled 8.5% on weak results whilst Intel fell 2.2% after the chipmaker lowered its 2Q24 revenue guidance amid a new Huawei ban.

Malaysia. Mirroring a mixed Wall St and regional markets, KLCI slipped 0.8-pt to 1,604.8, snapping its 4-day winning streak. Market breadth was 0.99 after enjoying a good run between 1.47-1.54 in the previous three session. Following the massive selling spree in Mar & Apr amounting to RM4.25bn, foreigners returned for bargain hunting for 8th consecutive day (+RM322m, May: +RM1.3bn, YTD: -RM923m) while local institutions (-RM306m, May: -RM1.06bn, YTD: +RM3.49bn) and local retailers (-RM16m, May: -RM280m, YTD: -RM2.57bn) continued their net outflows.

Outlook Ahead of the BNM’s meeting decision today, KLCI could extend its upward momentum in the near term, buoyed by sustained gains from Wall St amid rate cut hopes and the influx of foreign funds for 8th consecutive session. However, the benchmark could witness formidable barriers at 1,620-1,642 zones (support: 1,550, 1,565 and 1,585), potentially triggering profit-taking activities, in wake of the upcoming May reporting season, “Sell in May and go away” adage and overbought technical readings.

Source: Hong Leong Investment Bank Research - 9 May 2024