Choppy trend prevails amid central banks’ meetings and persistent foreign outflows 

KLCI: 1553.64 (0.8)
DOW: 38790 (+75)
FCPO (RM): 4236 (-51)
BRENT (USD): 86.9 (1.55)
USDMYR: 4.718 (0.011)
SGDMYR: 3.5266 (0.007)
EURMYR: 5.1424 (0.012)
AUDMYR: 3.099 (0.009)
GBPMYR: 6.0087 (0.006)
US: 10-yr yield (%) 4.32 (0.02)
BNM:10-yr yield (%) 3.879 (0.026)

Asia/US. Ahead of a barrage of central bank meetings from Japan (19 Mar), Australia (19 Mar), China (20 Mar) and US (20 Mar), most Asian bourse ended higher, led by Nikkei 225 (+2.7%) amid speculations that BOJ could exit its negative interest rates as the nation has finally escaped deflation and is headed on a path of sustainable growth due to rising wages, higher inflation coupled with a stable economy and improving corporate earnings. Meanwhile, SHCOMP rose 1% after retail sales, industrial production and fixed asset investment rose more than expected. 

Dow gained 75 pts to 38,790, led by mega cap stocks as investors looked to key AI conference and Bloomberg news that Apple was in talks with Google to include the company’s Gemini AI in iPhones. Meanwhile, the bets for a June cut has ticked down to 50% (vs 59% a week ago), sparked by red-hot inflation and strong payrolls.

Malaysia. Mirroring higher regional markets, KLCI rebounded from -8.5 pts to close +0.8-pt at 1,553.6, led by bargain hunting on utilities and banking stocks. Market breadth was positive for a 6th session at 1.14 vs 1.10 last Friday. Foreign investors continued their net outflows for the 13th out of 14 sessions (-RM248m, Mar: -RM2.37bn, YTD: -RM374m), followed by local retailers (-RM45m, Mar: -RM56m, YTD: -RM1.07bn) whilst local institutions emerged as the major net buyers (+RM293m, Mar: +RM2.43bn, YTD: +RM1.45bn).

Outlook Ahead of the US and other major central banks’ meetings this week, we reckon that the market is likely to stay choppy, as persistent foreign outflows (-RM2.37 in Mar MTD and -RM374m YTD) and the recent higher-then-expected US inflation data could force the market to reassess the timeline for US interest rate cuts. Major supports are pegged at 1,518-1,530-1538 while resistances are situated at 1,560-1,580-1,600 levels.

Source: Hong Leong Investment Bank Research - 19 Mar 2024