FBM KLCI

• The FBM KLCI remained flat for the week, slipping 0.1% (or 0.97 points) to 1,652.15 last Friday. The market consolidated amidst concerns over US economic growth and uncertainty about the extent of potential US interest rate cuts. Sector performance was mixed, with Construction (+3.3%) and Property (+2.2%) posting the biggest gains, while Energy (-1.4%) and Consumer Products & Services (-1.2%) saw the largest declines. Weekly turnover rose to 38.7b units valued at RM16.7b from 14.9b units valued at RM15.3b the previous week.

• Moving ahead, local investors are keeping an eye on the US interest rate decision on Wednesday, as the extent of the pace of rate cut is likely to influence the market direction this week. A potential larger US rate cuts might encourage foreign inflows and strengthen local markets due to stronger MYR. However, with most expectations already priced in, the market may consolidate in the near term.

• Technically, the FBM KLCI managed to stand firm above all its crucial 5-week and 13-week SMAs, indicating that both shortterm and medium-term uptrends remained intact. Additionally, the weekly stochastic and RSI indicators continue to show divergence, along with a relatively high MCDX, suggests that near-term consolidation may still be on the horizon.

• In short, we expect the market to consolidate with an upward bias during the first half of the week. However, higher volatility is anticipated in the second half following the U.S. Fed's monetary policy announcement. Regardless of the Fed's decision, global equity market volatility, including in Malaysia, is likely to rise. Key support levels are at 1,642, followed by 1,632, aligned with the 5-week SMA. On the upside, resistance levels are at 1,661, followed by the recent high of 1,684. 

Source: Kenanga Research - 18 Sept 2024