Consolidate Near 1,580-1,589 Amid the Peak Results Season and Geopolitical Risks 

Technical Pick: TEOSENG

KLCI: 1602.3 (-1.7)
DOW: 43269 (-120)
FCPO (RM): 4922 (22)
BRENT (USD): 73.3 (0.01)
USDMYR: 4.4727 (-0.01)
SGDMYR: 3.3365 (+0.00)
EURMYR: 4.7188 (-0.01)
GBPMYR: 5.648 (-0.01)
US: 10-yr yield (%) 4.40(-0.02)
BNM:10-yr yield (%) 3.85 (-0.01)

Asia/US. Asian markets ended mixed as investors awaited major results from NVDA (Nov 20) and economic indicators from China (LPR: Nov 20) and Japan (CPI: Nov 22). Sentiment was further dampened by escalating Russia-Ukraine tensions after Biden authorised Ukraine to use long-range US missiles to strike Russia. The Dow plunged as much as 450 pts in early trades, amid heightened geopolitical tensions following Ukraine's first strike on Russia using US missiles and Putin's approval of a new nuclear doctrine. However, the fall was narrowed to 120 pts to 43,269, lifted by NVDA (+4.9%) ahead of its highly anticipated results and WMT (+3%) on upbeat earnings and positive outlook. 

Malaysia. Mirroring the cautious US and regional markets, KLCI eased 1.7 pts after jumping 11.6 pts in the previously session. However, market breadth turned positive for the 1st time in nine days at 1.29 vs 0.91 previously. Foreign institutions emerged as the major net buyers after net selling RM748m in 8th straight day (+RM66m, Nov: -RM668m, YTD: +RM1.11bn) whilst local retailers (-RM47m, Nov: -RM176m, YTD: -RM4.90bn) and local institutions (-RM19m, Nov: +RM844m, YTD: +RM3.79bn) were the major net sellers. 

Outlook In wake of the of the Nov results season and foreign net outflows (Nov: -RM668m, Oct: -RM1.77bn), KLCI is likely to consolidate (support: 1,580-1,589; resistance: 1,630-1,636-1,648) in the near term. Additionally, heightened geopolitical tensions (particularly in Russia-Ukraine and Middle East), China’s weak growth, as well as expectations of more confrontational and protectionist policies under Trump 2.0 could trigger more economic fluidity and market volatility. 

Technically, TEOSENG will need a convincing breakout above the RM2.45 (downtrend line) hurdle to reinforce upside momentum towards RM2.52 (upper BB) and RM2.69 (52W high) levels, while key supports are pegged at RM2.26-2.30-2.35 zones. 

Source: Hong Leong Investment Bank Research - 20 Nov 2024