MARKET REVIEW

Asia/US. Asian markets ended lower on the back of a hotter-than-expected US Jan CPI print, raising expectations that the Fed will continue to raise rates higher and longer to combat inflation. The Dow slid as much as 256 pts before reversing its losses to close +39 pts at 34,128 while the US10YT gained 6 bps to 3.78% as investors weighed upbeat Jan retail sales (+3%, forecast 1.8%) and Feb NAHB housing market index (42, forecast 37) following a brisk Jan CPI print on Tuesday, signalling a resilient US economy and complicating the Fed's task to cool down inflation. On corporate front, Cisco price surged 10% in late trading after it gave an upbeat revenue prediction that suggested that spending on tech infrastructure is holding up better than expected.

Malaysia. Contrary to the tepid regional markets, KLCI rose 4.2 pts at 1,488.9 in the eleventh hour after falling as much as 5.7 pts intraday, led by buying interests on selected heavyweights i.e. MRDIY, DIGI, PCHEM, AXIATA, PETGAS, IHH etc. Market breadth was negative for the 8th consecutive session as the decliners outpaced the advancers by 450-to- 433 stocks. After disposing RM476m shares from (3-10 Feb), foreign institutions emerged as the major net buyers for a 3rd consecutive day (+RM103m, Feb: -RM294m) while local institutions (-RM53m, Feb: +RM122m) and retailers (-RM50m, Feb: +RM122m) turned net sellers in equities.

TECHNICAL OUTLOOK: KLCI

Following the 23.6-pt bounce in the last four sessions and closed comfortably above 200D MA at 1,488.2 yesterday, KLCI is likely to retest the next hurdles near 1,48 9 (20D MA) and 1,500 psychological levels, as technical are on the mend. A successful rebound above these levels may lift the benchmark toward 1,512-1,528 territory. Conversely, a fall below 200D MA or 1,480 levels will witness the index to revisit 1,450-1,460 zones.

MARKET OUTLOOK

In the wake of elevated inflation and concerns the Fed may keep interest rates higher for longer coupled with a weakening RM vs USD to RM4.39 yesterday (~4% since hitting a low of RM4.22 on 27 Jan), KLCI may be trapped in sideways consolidation (support: 1,460- 1,470; resistance: 1,500-1,512) in short term pending clearer leads from the local ongoing results season and the Budget 2023 presentation (24 Feb). Technically, MISC will need breakout confirmation above RM7.42 (the downtrend line from RM7.92 on 5 May) to enhance a triangle breakout toward RM7.63-7.92 resistance next while key supports are pegged at RM7.10-7.20 zones.

Source: Hong Leong Investment Bank Research - 16 Feb 2023