Range bound mode ahead of the key central banks’ meetings and Aug results season

KLCI: 1624.56 (11.7)
DOW: 40539.93 (-49.4)
MSCI Asia: 180.63 (1.9)
FCPO (RM): 3901 (-7)
BRENT (USD): 79.78 (-1.35)
USDMYR: 4.6363 (-0.021)
SGDMYR: 3.4513 (-0.015)
EURMYR: 5.0243 (-0.031)
AUDMYR: 3.0366 (-0.018)
GBPMYR: 5.9504 (-0.043)
US: 10-yr yield (%) 4.1744 (-0.019)
BNM:10-yr yield (%) 3.784 (0.004)

Asia/US. Asian markets ended mostly higher, taking cues from the rally on Wall St amid Fed’s rate cut optimism and soft-landing narrative in the US economy. However, sentiment remained cautious ahead of the BOJ and Fed policy decisions, key US economic prints (i.e. US jobs data, consumer confidence, US ISM manufacturing), major US earnings reports (i.e. MCD, MSFT, AMD, QCOM, META, AAPL, AMZN) and China’s Politburo meeting this week. Dow eased 49 pts to 40,540 as investors braced for a busy week of megacap earnings and FOMC policy announcement on 31 July. On earnings front, MCD (+3.7%) reported disappointing 2Q24’s top and bottom lines as sales fall globally for first time in more than three years. Nevertheless, management plans to "re-establish value leadership and improve transactions and same-store sales going forward" globally. 

Malaysia. In line with higher regional markets, KLCI jumped 11.7 pts to 1,624.6 after sliding 23.7 pts WoW, lifted by gains in PMETAL, CIMB, MAYBANK, CDB, SUNWAY and PBBANK. Market breadth rebounded to 1.38 vs 0.80 last Friday with 4.23bn shares (+10.4%) transacted valued at RM2.89bn (+7%). On fund flows, local institutions (+RM35m, July: -RM539m, YTD: +RM3.67bn) were the biggest buyers whilst local retailers (-RM18m, July: -RM632m, YTD: -RM4.01bn) and foreigners (-RM17m, July: RM1.17bn, YTD: +RM343m) emerged as major net sellers.

Outlook In the short term, KLCI may continue its consolidation as investors await the FOMC and BOJ policy outlooks, ongoing US corporate earnings and upcoming Bursa’s Aug results season. Barring a breakdown below the 1,606-1,611 support levels, KLCI may continue its upward trajectory towards 1,638-1,650-1,660 after a healthy profit-taking consolidation, underpinned by: (i) Fed’s rate-cut pivot, (ii) stable corporate earnings and economic growth in Malaysia, (iii) planned investments inflow, (iii) government reforms, and (iv) exuberance in investment themes. 

Source: Hong Leong Investment Bank Research - 30 Jul 2024