MARKET REVIEW

Global. Tracking overnight Wall St rally, Asian markets were higher in early trades but ended mixed as investors braced for the crucial US Jan inflation data. Despite strong earnings from Coca-Cola, Pepsi Co and Walt Disney, Wall St skidded overnight (Dow: - 1.47% to 35241; Nasdaq: -2.1% to 14185) after Jan CPI soared to multi-decade highs at 7.5% (consensus: 7.3%) amid heightened worries that the Fed is already behind the curve and could trigger more aggressive hikes and rapid withdrawal of pandemic-era stimulus. Meanwhile, Fed President James Bullard (a voting member in 2022’s rate-setting committee) threw his weight behind the idea of the Fed hiking rates 1% by July, sending Treasury yields soaring (+0.09% to 2.03%) as rate bets repriced after the hottest inflation reading in four decades.

Malaysia. Despite surging local Covid-19 cases amid the onslaught of Omicron variant, KLCI recorded its 2nd consecutive gain (+18.6 pts to 1570.1), underpinned by the overnight rally from Wall St, expectation of a positive 4Q21 GDP release today and the National Recovery Council’s (NRC) proposal to fully reopen Malaysia’s international borders (as early as March). Market breadth was positive with gainers outnumbered losers by 567 to 399 whilst total turnover rose 8.1% to 3.19bn shares valued at RM2.65bn.

TECHNICAL OUTLOOK: KLCI

Following the formation of two bullish Marubozu candlesticks above multiple major moving average and bullish indicators, the KLCI could trend towards 1580-1600 hurdles but do expect sporadic profit-taking activities to take place after rallying from YTD low at 1503. On the flip side, falling back below 200D MA near 1546 may warn that a consolidation may be taking place next, with lower supports situated at 1515-1535 levels.

MARKET OUTLOOK

Technically, the Marubozu candlesticks formation and bullish oscillators may spur KLCI to retest higher targets at 1580-1600. However, strong profit taking activities could emerge (after recent rally from 1503 YTD low) following an overnight slump in Wall St amid red-hot US Jan CPI data and hawkish comment from a Fed voting member, as well as the unfolding of Omicron waves in Malaysia. On the flip side, any pullback is likely to be cushioned near 1515-1535-1546 levels, supported by aggressive economic reopening activities, high vaccination rates, and elevated FCPO and crude oil prices.

Source: Hong Leong Investment Bank Research - 11 Feb 2022