MARKET REVIEW

Global. Asian markets were in a sea of red as investors weighed a more hawkish than expected Fed policy in rate hikes and the withdrawal of Covid-19 era stimulus coupled with the risks to economic recovery. US stocks whipsawed in volatile trading with the Dow eased 7 pts at 34160 (from +605 pts) whilst the Nasdaq 100 skidded 170 pts to 14003 (from +247 pts) as investors mulled over an update from the FOMC minutes, a strong 4Q21 GDP report and corporate earnings. On the corporate front, Tesla plunged almost 10% after the carmaker warned supply chain issues could persist throughout 2022 while Intel was down 7% on the mixed outlook for the 1Q22. Meanwhile, Apple share price rose about 5% in extended trading as the company’s supply chain challenges were improving while delivering a solid beat on earnings.

Malaysia. KLCI inched up 0.23-pt to 1516 due to bargain-hunting activities during the final hour of trading after hovering between 1510.6 and 1518.6. However, market breadth turned negative with losers outnumbered gainers by 589 to 329 whilst total turnover dropped 6% to 2.22bn shares valued at RM1.77bn. Local institutional funds net sold RM59m(5D: -RM259m) whilst local retailers (+RM14m; 5D: -RM16m) and foreign investors (+RM45m; 5D: +RM275m) were the major net buyers.

TECHNICAL OUTLOOK: KLCI

Following a steeply oversold position after tumbling 67 pts from 1570 to 1503, KLCI had recouped some losses to end at 1516 yesterday, 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 the next stiff barrier of 200D MA at 1549 zones.

MARKET OUTLOOK

Tracking the extended roller-coaster rides in Wall St, Bursa Malaysia should remain volatile in the holiday-shortened week (CNY holidays: 1-2 Feb; half-day trading: 31 Jan), clouded by the hawkish Fed, lingering Russia-Ukraine conflict, the beginning of the Omicron wave in Malaysia (as Covid-19 cases surged to 5439 on 27 Jan, the highest since 9 Dec), 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 - 28 Jan 2022