Poised to cross above YTD high of 1,559 amid imminent policy easing cycles and positive technicals

 KLCI: 1554.56 (9.8)
DOW: 39005.49 (235.8)
MSCI Asia: 176.71 (0.5)
FCPO (RM): 4168 (39)
BRENT (USD): 81.92 (-0.29)
USDMYR: 4.6782 (-0.004)
SGDMYR: 3.5148 (-0.006)
EURMYR: 5.1136 (-0.006)
AUDMYR: 3.0949 (-0.004)
GBPMYR: 5.9837 (-0.029)
US: 10-yr yield (%) 4.1507 (0.052)
BNM:10-yr yield (%) 3.837 (0.011)

Asia/US. Asian markets wavered before the key US inflation data, while the Nikkei 225 plunged as much as -570 pts intraday following an upbeat Feb PPI and 4Q23 prints. However, the benchmark pared its huge losses to -23 pts at 38,797 after BOJ’s governor Ueda struck a less positive tone on the economy. The Dow jumped 236 pts to 39,005 while the Nasdaq surged 246 pts to a fresh record high at 16,265 as investors took a hotter-than-expected inflation report in stride, which showed Fed headline inflation topped estimates while core inflation eased MoM. Meanwhile, the US10Y Treasury yields rose 5 bps to 4.15% amid higher for longer interest rate path after data showed US inflation remained sticky. Ahead of the Mar 20 FOMC meeting, key upcoming events are retail sales and PPI (14 Mar), consumer sentiment index (15 Mar) and housing starts (19 Mar), as the Fed remain cautious and will seek data that confirms further disinflation before acting.

Malaysia. Encouraged by a resumption of foreign inflows after net selling RM2.2bn in the last 9 consecutive session, KLCI gained 9.9 pts to 1,554.6. Market breadth was positive for a 2nd session at 1.04 vs 1.12 previously. Foreign investors turned net buyers (+RM47m, Mar: -RM1.75bn, YTD: +RM244m), absorbing the outflows by local institutions (-RM24m, Mar: +RM1.66bn, YTD: +RM684m) and local retailers (-RM23m, Mar: +RM92m, YTD: -RM929m). 

Outlook. In wake of the recovery in RM (vs USD) from 26Y high RM4.80 to RM4.678, imminent policy easing cycles to begin soon coupled with expectations of a resumption of foreign buying (after net sold RM2.2bn in the last 9 consecutive day), KLCI may attempt to revisit the YTD high of 1,559 levels this week, barring a decisive breakdown below 1,533-1,541 supports. However, we reckon that the market is likely to stay choppy ahead, as investors fret over global inflation and rates outlook before the Mar FOMC meeting on 20 Mar.

Source: Hong Leong Investment Bank Research - 13 Mar 2024