KLCI: 1602.41 (1.6)
DOW: 41938.45 (-696.8)
MSCI Asia: 177.87 (-1.6)
FCPO (RM): 4391 (95)
BRENT (USD): 79.76 (2.84)
USDMYR: 4.4973 (-0.006)
SGDMYR: 3.2864 (-0.002)
EURMYR: 4.6322 (-0.008)
AUDMYR: 2.7808 (-0.007)
GBPMYR: 5.5331 (0.003)
US: 10-yr yield (%) 4.7592 (0.07)
BNM:10-yr yield (%) 3.787 (-0.003)
Asia/US. Ahead of the key US jobs data, Asian markets tumbled, led by a 1.33% rout on SHCOMP and sliding Yuan (vs USD), underscoring mounting concerns about China’s economic outlook. Sentiment was also dampened by a potential BOJ’s rate hike on Jan 25 after the upbeat wages and private spending data. The Dow plunged 697 pts to 41,938 as a robust NF jobs report and higher year-ahead inflation expectations may delay Fed’s rate-cut path to 2H25. This week, investors are focused on the start of the 4Q24 earnings season (projected to grow 11% YoY), particularly from JPM, WFC, C, GS, BAC, UNH and MS, to gauge whether valuations are outpacing reality. On the data front, investors will scrutinise the PPI and inflation data, retail sales, and housing starts, which will be pivotal in shaping FOMC upcoming decision on Jan 30.
Malaysia. Bucking the sluggish regional markets, KLCI inched up 1.6 pts to 1,602.4 in a volatile trade after sliding 41.5 pts in six days. Nevertheless, market breadth remained negative for the 7th time in eight session at 0.84 vs 0.26 last Friday. Foreign institutions continued their net outflows for the 7th day (-RM66m, Jan: -RM603m, Dec: -RM2.88bn) while local retailers (+RM51m, Jan: +RM178m, Dec: -RM797m) alongside local institutions (+RM15m, Jan: +RM425m, Dec: +RM3.68bn) emerged as major net buyers.
Technical view After rebounding from a 1,586.4 (2M low) to 1,644.5 (Dec 31 high), KLCI extended its profit taking to end at 1,602.4 last Friday. Given external headwinds and weak technical readings after multiple key supports’ breakdown, deeper consolidation may be underway. A decisive fall below 1,586-1,600 zones could drag the benchmark lower towards 1,573 (200W MA) while key barriers are pegged at 1,611 (200D MA), 1,623 (38.2% FR) and 1,635 (50% FR) levels.
Outlook Mirroring the Wall St’s rout last Friday and KLCI’s weakening technical readings following multiple key supports breakdown, deeper consolidation may be underway (support: 1,573-1,586); resistance: 1,611-1,623-1,635) as investors weigh: (i) the implications of Trump 2.0 policies (post Jan 20 inauguration); (ii) a more hawkish Fed; (iii) continued foreign outflows; (iii) China's economic challenges, as well as (iv) upcoming major central banks’ policy decisions, notably from the BOJ (Jan 25), ECB and FOMC (Jan 30).
Source: Hong Leong Investment Bank Research - 13 Jan 2025