FBM KLCI

• The FBM KLCI edged down 0.17% (2.66 points) to close at 1,589.78 last week, as cautious sentiment lingered amid expectations of slower U.S. rate cuts, a weaker MYR, foreign outflows, and escalating Russia-Ukraine tensions. Sector-wise, Construction (+3.4%) and Industrial Products & Services (+3.0%) led the gains, while Utilities (-3.4%) and Transportation & Logistics (-1.2%) saw the largest declines.
• This week, the market's direction will likely be driven by domestic factors as the 3QCY24 earnings season concludes. Key companies announcing results include banking heavyweights MAYBANK, PBBANK, RHB Bank, and HL Bank, along with utilities giant TENAGA. Externally, geopolitical tensions and concerns over Trump's potential protectionist trade policies may continue to prompt fund managers to reassess regional investments and weigh on the MYR. Additionally, crude oil prices could see heightened volatility ahead of the upcoming OPEC+ meeting on 1 Dec., with recent reports suggesting a potential delay in December's planned production increase by a month or more due to concerns about weak demand and rising supply.
• Technically, the FBM KLCI remains below its 5- and 13-week SMAs, signalling a cautious outlook. Breaking below the June 2023 upward trend-line further suggests a renewed downward trend. While the stochastic and RSI indicators have moderated following recent selling pressure, they remain above oversold levels, indicating room for further consolidation.
• In short, the market is expected to maintain a downward bias this week unless corporate earnings surpass expectations. Key support levels are at 1,580 (50-week SMA) and 1,563 (38.2% Fibonacci retracement), with resistance at 1,600 and 1,613 (13- week SMA).

Source: Kenanga Research - 25 Nov 2024