Lock in a range bound mode ahead of the Aug results season

KLCI: 1629.68 (7.6)
DOW: 40358.09 (-57.4)
MSCI Asia: 182.72 (0.7)
FCPO (RM): 3983 (14)
BRENT (USD): 81.01 (-1.39)
USDMYR: 4.6733 (-0.009)
SGDMYR: 3.4741 (-0.008)
EURMYR: 5.0786 (-0.021)
AUDMYR: 3.0963 (-0.024)
GBPMYR: 6.0339 (-0.02)
US: 10-yr yield (%) 4.2506 (-0.002)
BNM:10-yr yield (%) 3.808 (-0.001)

Asia/US. Asian markets ended mixed as investors looked beyond Biden’s decision to quit re-election and focus on the ongoing US 2Q24 results season and the Fed’s rate-cut optimism. Sentiment was cautious, dampened by a 1.65% slump on SHCOMP amid a lack of major policy support after the 3rd Plenum last week. Dow (-0.14% to 40,358), S&P 500 (-0.16% to 5.555) and Nasdaq 100 (-0.33% to 19,756) all showed little movement as investors looked beyond Biden’s ending his re-election campaign and political chaos to focus on the ongoing 2Q24 results season and the Fed’s rate-cut optimism, to justify their rich valuations. After the bell, TSLA slid 6.9% as earnings fall short of consensus while GOOGL fell 2% as its YouTube advertising revenue missed expectations. 

Malaysia. KLCI rebounded (+7.6 pts to 1,629.7) from a 14.5-pt decline previously, led by bargain hunting on selected heavyweights i.e. YTL, YTLPOWR, PCHEM, SUNWAY, CIMB and MAYBANK. Market breadth returned to +1.5 after staying negative in the last three sessions, supported by daily volume of 5.12bn shares (-4.1%) valued at RM3.59bn (+5.0%). Foreigners continued their net inflows for the last 15 out of 16 days (+RM151m, July: +RM1.6bn, YTD: +RM788m) whilst local retailers (-RM86m, July: -RM719m, YTD: -RM4.16bn) and local institutions (-RM65m, July: -RM837m, YTD: +RM3.38bn) were the major net sellers. 

Outlook In the short term, KLCI may drift sideways as investors await more clarity on the Fed’s rate-cut trajectory, US corporate earnings outlook and upcoming Bursa’s Aug results season. Unless the 1,606-1,614 support levels are breached, KLCI may continue its upward trajectory towards 1,646-1,660 after a brief profit-taking consolidation, underpinned by: (i) Fed’s rate-cut optimism, (ii) stable corporate earnings and economic growth, (iii) planned investments inflow, (iii) government reforms, (iv) exuberance in investment themes, and (v) renewed buying interests from foreign investors. 
 

Source: Hong Leong Investment Bank Research - 24 Jul 2024