KUALA LUMPUR: Bursa Malaysia's barometer index is set to test the 1,480 level next week riding on bullish year-end seasonalities and global equities strength.
Inter-Pacific Asset Management Bhd chief economist and fund manager Datuk Dr Nazri Khan said the expectation of a pause in the interest rate hike due to the cooling US inflation data is also expected to continue boosting risk appetite for stocks.
"The more benign inflation readings will fuel speculations that central banks including the US Federal Reserve (Fed), the European Central Bank, and the Bank of England have finished raising rates," he told Bernama.
The Fed held its benchmark interest rate steady at a 22-year high earlier this month.
"Currently, futures markets were pricing zero chance that the central bank would lift rates at its next policy meeting in December.
"Investors also brought forward their estimates of when the Fed would start cutting rates, with investors pricing in two 0.25-percentage-point cuts by July," he noted.
On Wednesday, Bursa Malaysia rose to more than an eight-month high after US October inflation unexpectedly slowed to 3.2 per cent compared to an estimate of 3.3 per cent, boosting bets that the Fed is already done with its rate hike cycle.
The market, however, failed to sustain its rally as profit-taking emerged on Thursday.
"The key index managed to hold above the 1,450 psychological level at the day's close. The rally was also in tandem with the stronger regional indices despite the Middle East Palestine tension and China's continuing property sector woes," he said.
Similarly, Rakuten Trade equity research vice-president Thong Pak Leng also believed that the local market may possibly turn positive due to persistent net inflow from foreign funds, which reached more than RM1 billion this month-to-date, and the strong fundamentals of the local economy will drive the market going forward.
"Technically, the benchmark index breached the pivotal resistance level of 1,465 on Nov 15, but retraced in subsequent sessions due to prevailing domestic sentiment focused on profit-taking following the recent robust rally," he said.
On Friday, Malaysia reported an economic expansion of 3.3 per cent in the third quarter from 2.9 per cent in the second quarter, supported by resilient domestic demand.
Bank Negara Malaysia (BNM) governor Datuk Abdul Rasheed Ghaffour expected the domestic economy to expand by about 4.0 per cent in 2023 and 4.0-5.0 per cent in 2024 despite the challenging global environment.
"With the rising exponential moving averages, we maintain the perspective that the upward bias persists in the near term. If the FTSE Bursa Malaysia KLCI (FBM KLCI) manages to surpass the 1,465-resistance threshold again, we anticipate further upward potential," Thong said, adding the key index is expected to move between 1,450 and 1,470 in the upcoming week, with support at 1,430.
Next week, investors will closely monitor the minutes of the Federal Open Market Committee's Oct 31 - Nov 1 meeting to be released on Tuesday, which could set a new narrative for the global economic path.
The US Purchasing Managers Index for manufacturing and services will also be released during the week, in addition to the weekly jobless claims.
On a Friday-to-Friday basis, the FBM KLCI gained 15.49 points to end the week at 1,460.67 versus 1,445.18 a week earlier.
On the index board, the FBM Emas Index climbed 108.51 points to 10,799.98, the FBMT 100 Index was 108.91 points stronger at 10,462.50, the FBM Emas Shariah Index went up 107.57 points to 11,004.74, the FBM 70 Index jumped 140.15 points to 14,302.08, and the FBM ACE Index increased 39.29 points to 5,171.94.
Sector-wise, the Financial Services Index expanded 86.57 points to 16,382.64, the Plantation Index added 84.45 points to 7,006.74, the Industrial Products and Services Index rose 1.52 points to 173.92, while the Energy Index lost 6.84 points to 852.50.
Bursa Malaysia ended the shortened trading week with a lower weekly turnover of 13.78 billion units valued at RM7.93 billion versus 17.0 billion units valued at RM10.04 billion in the preceding week.
The Main Market volume shrank to 8.93 billion shares worth RM6.8 billion against 11.29 billion shares worth RM8.78 billion in the previous week.
Warrants turnover improved to 2.11 billion units valued at RM291.87 million from 1.90 billion units valued at RM264.22 million last week.
The ACE Market volume declined to 2.71 billion shares worth RM835.79 million from 3.73 billion shares worth RM984.0 million previously.