Volatility persists with resistance at 1,589-1,612 amid Trump 2.0, key central bank meetings, and continued foreign exodus 

KLCI: 1572.34 (5.6)
DOW: 43487.83 (-)
MSCI Asia: 180.96 (2.1)
FCPO (RM): 4209 (3)
BRENT (USD): 80.15 (-0.64)
USDMYR: 4.4935 (-0.013)
SGDMYR: 3.2908 (-0.007)
EURMYR: 4.631 (-0.009)
AUDMYR: 2.7856 (-0.01)
GBPMYR: 5.4717 (-0.025)
US: 10-yr yield (%) 4.627 (-)
BNM:10-yr yield (%) 3.791 (-0.006)

Asia/US. Ahead of Trump’s Jan 20 inauguration, Asian markets ended mostly rose on hopes of a less harsh rhetoric against China and expectations of more aggressive stimulus measures from China to offset the economic headwinds from any potential tariff increases. The Dow was closed for the Martin Luther King holiday. Following Trump’s inauguration, the Dow future gained 250 pts at the point of writing as Trump pledged to overhaul US immigration, trade, tax and energy policy, aiming to reshape the country’s economy and foreign relations, but he stopped short of immediately unveiling new tariffs and called for federal agencies to review levy policies. This week, attention turns to a busy earnings season with reports from NFLX, PG, JNJ, GE, TXN, AXP and VZ, while key economic data include S&P Global PMIs and existing home sales. 

Malaysia. KLCI gained for a 2nd day (+5.6 pts to 1,572.3) after plunging from a high of 1,644.5 (31 Dec) to a low of 1,545.7 (Jan 17) as values re-emerged following the recent rout, amid hopes that Trump’s pro-business policies could lead to a recalibration of the widely criticised AI Diffusion framework. On fund flows, foreign institutions continued their net outflows for the 13th day in Jan (-RM139m, Jan: -RM2.07bn, 2024: -RM4.2bn) alongside local retailers (-RM8m, Jan: +RM701m, 2024: -RM5.74bn) while local institutions (+RM147m, Jan: +RM1.37bn, 2024: -RM9.95bn) emerged as major net buyers.

Technical view From a 3M high of 1,644.5 (Dec 31), KLCI extended its consolidation to a low at 1,545.7 (Jan 17) before staging a relief rally to 1,572.3. Following the piercing pattern on Jan 17, KLCI may see a potential downtrend reversal, targeting 1,589 (61.8% FR), 1,600 and 1,612 (200D MA) levels. On the downside, a decisive breakdown below 1,545-1,550 may reignite more selldown towards 1,529 (Aug 5 low) and 1,500 levels. 

Outlook The technical rebound over the last two days may continue this week towards 1,589-1,600 (support: 1,529-1,550) zones amid bottoming up technical readings. However, further gains could be capped at 1,612, as investors recalibrate: (i) Trump 2.0 policies; (ii) China’s economic challenges; (iii) persistent foreign exodus, and (iv) upcoming major central banks’ policy decisions, notably from the BOJ (Jan 24), ECB and FOMC (Jan 30). 

Source: Hong Leong Investment Bank Research - 21 Jan 2025