Range bound consolidation as 2Q24 earnings season gathers momentum 

KLCI: 1596.05 (5.7)
DOW: 39497.54 (51.1)
MSCI Asia: 175.43 (2.6)
FCPO (RM): 3747 (43)
BRENT (USD): 79.66 (0.5)
USDMYR: 4.424 (-0.049)
SGDMYR: 3.3415 (-0.035)
EURMYR: 4.8308 (-0.057)
AUDMYR: 2.9128 (-0.017)
GBPMYR: 5.6453 (-0.023)
US: 10-yr yield (%) 3.9398 (-0.048)
BNM:10-yr yield (%) 3.742 (0.009)

Asia/US. Asian markets ended mostly higher, boosted by a relief rally from Wall St amid lower jobless claims and a tick-up in China’s CPI. Sentiment was also buoyed by BOJ’s downplaying of near-term rate hikes amid market instability. The Dow ended a turbulent week on a calmer note, ending +51 pts to 39,497 (WoW: -240 pts) amid a relatively quiet session with no major economic reports or earnings releases. Meanwhile, the US 10Y bond yield slipped 5 bps to 3.94% due to lowered bets for Fed’s aggressive rate cuts in Sep following a sharp fall in weekly jobless claims. This week’s key economic data include PPI (13 Aug), CPI (14 Aug), retail sales (15 Ai\ug) and consumer sentiment (16 Aug) for insights on the path of the economy and monetary policy. 

Malaysia. Tracking the higher Wall St and regional markets, KLCI jumped as much as 13.7 pts before ending +5.6 pts at 1,596.1 (WoW: -15 pts). WoW, ADT volume surged 36% to 5.86bn shares while ADT value added 43% to RM4.66bn. Local institutions (+RM144m, WoW: +RM1.19bn, Aug: +RM1.0bn, YTD: +4.47bn) emerged as the major net buyers for the 5th straight session while foreigners (-RM131m, WoW: -RM768m, Aug: -RM656m, YTD: -RM165m) and local retailers (-RM13m, WoW: -RM426m, Aug: -RM345m, YTD:  RM4.31bn) retained their net outflows for the 5th straight day. 

Outlook With easing concerns about a US recession and the unwinding of the Yen carry trade coupled with positive expectation of Malaysia’s 2Q24 GDP release (16 Aug), KLCI may continue its technical bounce to refill the 1,593-1,607 gap, but expect volatility along the away amid ongoing external risks. Locally, earnings uncertainty ahead of Bursa’s Aug results season could witness resistance at the 1,612-1,638 range (support levels: 1,565-1,588), aligning with a seasonally weak month of Aug (average KLCI growth for 10Y/20Y: -1.1%/-1.4%).

Technically, NOTION is poised for a downtrend reversal following the hammer-liked pattern on 7 Aug (support: RM1.48-1.61). A strong breakout above RM1.80-1.93 hurdles may spur greater upside towards RM2.05-2.20 zones next.

Source: Hong Leong Investment Bank Research - 12 Aug 2024