Market may waver amid extended foreign selling 

KLCI: 1535.83 (4.3)
DOW: 38791.35 (130.3)
MSCI Asia: 175.98 (0.6)
FCPO (RM): 4082 (11)
BRENT (USD): 82.96 (0)
USDMYR: 4.7052 (-0.027)
SGDMYR: 3.5223 (-0.007)
EURMYR: 5.1297 (-0.017)
AUDMYR: 3.1041 (0.017)
GBPMYR: 5.9995 (-0.025)
US: 10-yr yield (%) 4.0827 (-0.019)
BNM:10-yr yield (%) 3.847 (-0.003)

Asia/US. Most Asian stocks ended mixed amid varying opinions from Powell and other Fed officials on future US rates path, while Nikkei 225 slid 1.4% amid speculation over a Bank of Japan pivot. Meanwhile, SHCOMP fell 0.4% as optimism over stronger-than-expected trade data was largely offset by the threat of new US restrictions on Chinese companies. Ahead of the crucial US jobs report tonight, Dow rose 0.3% to 38,791 while both S&P 500 (+1% at 5,157) and NASDAQ (+1.5% to 16,273) reached new record highs. Investors’ sentiment was bolstered by Powell’s reaffirmation that rate cuts are likely on the table this year, adding to traders’ optimism that the Fed may begin to cut rates by 0.25% to 5.25% as early as June meeting, with expectations rising to 56.4% vs 52.8% a week ago. 

Malaysia. Lifted by bargain hunting activities on selected heavyweights (e.g. CDB, MAYBANK, GENTING, NESTLE, PPB and IHH) and a recovery in RM to RM4.70 (vs USD from 26Y low of RM4.80), KLCI gained 4.3 pts to end at 1,535.8, despite persistent net selling by foreigners for the 7th consecutive session. Market breadth turned positive at 1.21 after staying in negative territory for 9th straight days. Foreign investors were the major net sellers (-RM178m, Mar: -RM1.63bn, YTD: +RM367m) followed by the local retailers (-RM18m, Mar: +RM155m, YTD: -RM866m) while local institutions (+RM196m, Mar: +RM1.48bn, YTD: +RM498m) emerged as the major net buyers. 

Outlook Ahead of the crucial US jobs data tonight, KLCI may continue to waver as investors weigh a flurry of the Fed official speeches, more updates from the ongoing China’s NPC coupled with a resumption of foreign net selling (7th consecutive session amounting RM2.06bn). Technically, barring a decisive fall below 1,508-1,518 supports, the odds would still favour the bulls to resume its ascent after a brief consolidation (resistance: 1,560-1,570). However, it is worth noting that historically, the KLCI has performed poorly in March, with average declines of 3.3% and 0.8% over the past 5 and 10 years, respectively. 

Source: Hong Leong Investment Bank Research - 8 Mar 2024