MARKET REVIEW

Global. Mirroring Wall Street’s slide last Friday, Asian markets ended mostly lower in anticipation of a more hawkish Fed during the 25-26 Jan FOMC meeting and rising Russia Ukraine tensions. On the back of a full swing in earnings season (over 30% of the Dow companies reporting this week), heightened geopolitical tensions in Russia-Ukraine and expectations of an aggressive Fed, Wall St experienced a tumultuous day before mounting a dramatic comeback as investors snapped up bashed down stocks. During the day, the Dow dived as much as 1115 pts to 33150 (-10.3% from all-time high 36952) before closing +99 pts at 34364 whilst the Nasdaq 100 plunged as much as 714 pts to 13724 (-18.1% from all-time high 16767) before ending +71 pts at 14509.

Malaysia. In line with US markets’ rout last Friday, KLCI slipped 5.2 pts at 1521.8, recording its six straight decline, led by selldown in IHH, HARTA, TOPGLOV, RHBBANK, MAYABNK and CIMB. Market breadth was negative as 595 losers beat 335 gainers with turnover up 7% to 2.83bn shares valued at RM1.98bn.

TECHNICAL OUTLOOK: KLCI

After plunging 47.6 pts in six consecutive sessions, KLCI’s recent rebound from 1475 low has stunted after staying below multiple key MAs and support trendline. The downward momentum would likely persist with the next crucial neckline support at 1515 ahead of the 25-26 Jan FOMC meeting. A decisive breakdown will confirm the double top pattern and trigger more selldown towards 1500 psychological levels. Stiff hurdles are situated at 1533- 1540-1550 zones.

MARKET OUTLOOK

Technically speaking, we expect Bursa Malaysia to remain choppy (supports: 1475-1500- 1515; resistances: 1533-1540-1550) ahead of the widely-watched FOMC meeting and the CNY celebrations next week. Investors could be prone to minimise exposure while markets grapple with issues like skyrocketing inflation, fears of aggressive Fed’s rate hikes and the possible reduction of its USD8.8tr balance sheet, geopolitical tensions, slowing China’s economy, upcoming Feb results season and Johor snap polls (within 60 days after the state assembly was dissolved on 22 Jan).

Source: Hong Leong Investment Bank Research - 25 Jan 2022