MARKET REVIEW

Asia/US. In sync with an overnight 1,276 pts slump from Dow, MSCI All Countries Asia Pacific index tumbled 1.79% to 152.56 as an elevated US Aug CPI data prompted bets that the Fed may deliver a bigger 100 bps increase on 20-21 FOMC meeting. Dow staged a 30- pt technical rebound after sliding 1,276 pts yesterday as investors weighed the red-hot Aug CPI print and a fresh Aug PPI (eased 0.1% MoM and in line with forecasts) to gauge whether the Fed may further accelerate its rate-hiking path. Fed funds futures are now placing a 76% probability of a 75 bps hike in next week’s meeting and a lower 24% likelihood of a 100 bps hike (vs 30% yesterday).

Malaysia. Tracking regional markets’ slide and further liquidations by foreign institutions, KLCI slid 19.4 pts to 1,468.4 with all 13 sub-indices ended in negative territory. Market breadth (gainers/losers) fell further to 0.43 from 0.78 a day ago, with 2.63bn shares traded valued at RM1.63bn.

TECHNICAL OUTLOOK: KLCI

In line with Wall St and regional markets’ slump, KLCI extended its profit taking consolidation to slip below another key 100D MA support (1,477 levels) to end at 1,468.4. Following the multiple MA supports breakdown and weakening indicators, KLCI is expected to continue its consolidation for a while, with lower supports pegged at 1,455 (61.8% FR) and 1,436 (76.4% FR) levels. Meanwhile, stiff hurdles are placed at 1,482 (38.2% FR), 1,500 and 1,527 (200D MA) levels.

MARKET OUTLOOK

In line with the Wall St rout, a breakdown below the KLCI supports trendline and weakening indicators, the benchmark could stay volatile ahead of the long weekend (16 Sep: Malaysia Day) holidays. Major supports are situated at 1,436-1,455 levels while stiff hurdles are near 1,482-1,500. Overall, cautious sentiment prevails as investors await the tabling of Budget 2023 (7 Oct) and timing of GE15, as well as lingering risks such as elevated inflation, rising interest rates, weakening RM, global economic slowdown and escalatin g geopolitical tensions.

Source: Hong Leong Investment Bank Research - 15 Sept 2022