Pending a breakout above 1,634 before advancing towards 1,650-1,660 zones

KLCI: 1625.96 (-3.9)
DOW: 40954.48 (742.8)
MSCI Asia: 186.86 (-0.7)
FCPO (RM): 3945 (20)
BRENT (USD): 83.73 (-1.12)
USDMYR: 4.6768 (0.003)
SGDMYR: 3.4801 (-0.002)
EURMYR: 5.0968 (-0.003)
AUDMYR: 3.1552 (-0.014)
GBPMYR: 6.0651 (-0.002)
US: 10-yr yield (%) 4.1576 (-0.072)
BNM:10-yr yield (%) 3.824 (0.001)

Asia/US. Asian markets ended mixed as investors awaited updates from China's 3RD Plenum, hoping for measures to boost the struggling Chinese economy. They also assessed Powell's dovish narrative and expressed growing concerns about the Asian economy and geopolitics amidst rising odds for a potentially hawkish Trump 2.0 presidency. Dow gained for a 5th straight session to close at a fresh record high (+743 pts to 40,954) as the bull market broadened out beyond technology names as risk cuts in sight, with Powell indicating plans to reduce interest rates before hitting the inflation 2% target due to the delayed effects of monetary policy. Sentiment was also driven by better-than-expected retail sales data and a slew of upbeat earnings from corporates UNH, BOC and MS. 

Malaysia. Mirroring its weak ASEAN peers (JCI: -0.75%, SET: -0.43%, STI: -0.34%), KLCI fell 3.9 pts or 0.24% to 1,626 on profit taking after rallying 175 pts YTD and 40 pts in July MTD. Market breadth slipped to 0.52 vs 1.50 previously while daily volume slipped 13% to 4.66bn shares valued at RM3.52bn. For the 12th straight session, foreigners were the major net buyers (+RM64m, July: +RM1.26bn, YTD: +RM434m) alongside local retailers (+RM21m, July: -RM658m, YTD: -RM4.04bn) while local institutions (-RM85m, July: -RM604m, YTD: +RM3.61bn) retained as major net sellers for the 4th day. 

Outlook In wake of the Fed’s rate-cut pivot, the return of foreign investors (July: +RM1.26bn, YTD: +RM434m), coupled with exuberance in investment themes, KLCI is poised to stage a breakout above immediate barrier at 1,634 (support: 1,600-1,606-1,617), before revisiting higher resistances towards 1,660-1,676 zones.

Source: Hong Leong Investment Bank Research - 17 Jul 2024