Tight Range Bound Ahead of the CNY Holidays

KLCI: 1512.98 (1.6)
DOW: 38521.36 (141.2)
MSCI Asia: 167.33 (1.5)
FCPO (RM): 3867 (24)
BRENT (USD): 78.59 (0.6)
USDMYR: 4.7677 (0.019)
SGDMYR: 3.5417 (0.013)
EURMYR: 5.1156 (0.009)
AUDMYR: 3.0964 (0.01)
GBPMYR: 5.9799 (-0.004)
US: 10-yr yield (%) 4.1 (-0.058)
BNM:10-yr yield (%) 3.819 (-0.004)

Asia/US. Asian markets shrugged off a slow start on Wall Street, rebounding from initial losses to finish mostly higher, buoyed by the rally in SHCOMP (3.2%). Beijing's proactive measures to stabilize the markets, such as a state fund's commitment to increase stock purchases and reported discussions with President Xi, contributed to the positive sentiment. The Dow gained 141 pts from a 274-pt fall in the previous session, as investors assessed a slew of corporate earnings (Palantir Tech, GE Healthcare Tech, Eli Lily, Amgen etc) and weighed latest comments from Fed officials that reinforced bets the Fed will not start lowering rates in March, and will likely move at a considerably slower pace than the market expects. 

Malaysia. Tracking higher regional markets, KLCI gained 1.6 pts to 1,513. Market breadth turned positive (its 1st gain in six session) at 1.14 vs 0.64 a day ago. Foreign investors (+RM189m, YTD: +RM957m) continued its net inflows for the 4th straight session while local institutions (-RM183m, YTD: -RM254m) and local investors (-RM6m, YTD: -RM703m) were the major net sellers.

Outlook. Bursa Malaysia may continue its tight range bound consolidation (resistance: 1,528-1,548; support: 1,486-1,500), with more subdued trading activities ahead of the CNY celebrations (Bursa holiday: 12 Feb). Moreover, sentiment is likely to remain cautious, in the wake of the lingering concerns of the Fed’s higher-for-longer interest rates until inflation is moving down to 2% in a sustainable way, as well as the sustainability of China stock markets rebound yesterday as Beijing intensifies efforts to stem market rout. 

Source: Hong Leong Investment Bank Research - 7 Feb 2024