Wild swings ahead as investors gird with US elections, Fed meeting, geopolitics and earnings season 

KLCI: 1618.3 (-13.9)
DOW: 42114.4 (-260)
MSCI Asia: 186.54 (-0.3)
FCPO (RM): 4536 (-67)
BRENT (USD): 76.05 (1.67)
USDMYR: 4.3427 (-0.006)
SGDMYR: 3.2888 (-0.006)
EURMYR: 4.7 (0.005)
AUDMYR: 2.8793 (-0.014)
GBPMYR: 5.6371 (0)
US: 10-yr yield (%) 4.2399 (0.028)
BNM:10-yr yield (%) 3.861 (0.005)

Asia/US. Tracking a 4th consecutive loss on the Dow, Asian markets ended lower as investors weighed a hotly contested general election in Japan (Oct 27) and BOJ meeting (Oct 31). Sentiment was also cautious as investors brace for busy weeks ahead of the US key jobs data and 3Q results season, US elections (Nov 5) and FOMC meeting (Nov 7). The Dow tumbled 260 pts at 42,114 (-1162 pts WoW), marking its 5th consecutive loss as investors grappled with the Middle East tensions and a wave of key economic data, including job openings, NF payrolls and advanced 3Q GDP). Meanwhile, major 3Q earnings on the tap are expected from MSFT, GOOG, V, META, TSLA, K, AAPL, AMZ, MA and XOM. 

Malaysia. Amid a lack of local fresh catalysts and external woes, KLCI slid 13.9 pts to 1,618.3, recording its 5th straight decline (-27.7 pts WoW), driven by sell-offs in YTLPOWR, YTL, PBBANK, CDB and MAXIS. Market breadth was negative at 0.54 with lower trading volume (-6.8% to 2.47bn shares) and value (-6.1% to RM2.14bn). Local institutions (+RM37m, WoW: +RM244m, Oct: +RM756m) and local retailers (+RM28m, WoW: -RM48m, Oct: +RM79m) were the major net buyers while foreign institutions (-RM65m, WoW: -RM196m, Oct: -RM835m) emerged as sole net sellers.

Outlook In wake of upcoming 3Q24 local results season, foreign net outflows (Oct MTD: -RM835m, Sep: RM510m), bearish technical readings coupled with sluggish leads from Wall St, KLCI is likely to consolidate further (support: 1,600-1,607; resistance: 1,625-1,638-1648) in the near term. Moreover, the outlook may be tempered by external risks, including the potential for a wider Middle East turmoil (after Israel launched direct strikes against Iran on Oct 26), a contentious US election given the sharply divergent trade priorities between Harris and Trump, and uncertainties surrounding China's stimulus measures and its economic recovery plans.

VIRTUAL PORTFOLIO We had squared off our position on SMRT (9.3% return) last Friday.

Source: Hong Leong Investment Bank Research - 28 Oct 2024