Global. Asian markets ended mixed ahead the conclusion of FOMC meeting, IMF’s downgrade of 2022 global GDP growth to 4.4% (from 5.9% previously) on rising Covid-19 cases, supply chain disruptions and surging inflation, coupled with the heightened geopolitical tensions between Russia and Ukraine. In a choppy trade, the Dow ended -130 pts at 34168 (from +463 pts) and the Nasdaq 100 inched up 23 pts to 14172 (from +316 pts) whilst the US 10Y bond yield jumped 0.09% at 1.86% after the Fed signalled an interest rate hike could be coming soon in March and the balance -sheet reduction to commence after lift-off begins. Meanwhile, supply concerns stemming from escalating Russia-Ukraine conflict saw Brent oil prices soared 1.87% to USD89.9/barrel.
Malaysia. Bucking extended rout in Wall St, KLCI staged 6.85-pt technical rebound to 1515.76 after plunging 60.6 pts in the last seven consecutive days, led by bargain hunting activities on selected heavyweights i.e. MAYBANK, PMETAL, HARTA, PBBANK, MRDIY and HLBBANK. Market breadth tuned positive with gainers outnumbering losers 618 to 215 whilst total turnover shed 16% to 2.36bn shares valued at RM1.8bn. Both local institutional funds (-RM8m; 5D: -RM259m) and retailers (-RM13m; 5D: -RM21m) were the major net sellers while foreign investors net bought RM22m shares (5D: +RM280m).
Following a steeply oversold position after tumbling 60.6 pts in the last 7th consecutive sessions, KLCI staged a long-awaited technical rebound to end +6.9 pts to 1515.8, a tad above the key 1515 neckline support. We expect volatility to prevail with a crucial support at the 1500 psychological mark. If a decisive breakdown arises, the next support is anticipated at 52-week low at 1475. On the flip side, a strong breakout above 1522-1533 hurdles will lift the index to revisit another stiff barrier near the 200D MA at 1549 zones.
Tracking the extended rout in Wall St, Bursa Malaysia should remain choppy, clouded by the hawkish Fed, lingering Russia-Ukraine conflict, the CNY celebrations next week as well as the upcoming Feb reporting season. On the index, the confirmed breakdown below multiple key MAs and 1515 supports will grease correction towards 1475-1500 zones whilst stiff resistances are situated at 1522-1533-1549 territory.
Source: Hong Leong Investment Bank Research - 27 Jan 2022