Technical rebound continues with key barriers at 1,589-1,612 amid Trump 2.0 and key central bank meetings 

Technical Pick-IOIPG

KLCI: 1580.46 (8.1)
DOW: 44025.81 (538)
MSCI Asia: 181.3 (0.3)
FCPO (RM): 4221 (-39)
BRENT (USD): 79.29 (-0.86)
USDMYR: 4.4755 (-0.018)
SGDMYR: 3.2919 (0.001)
EURMYR: 4.6335 (0.002)
AUDMYR: 2.7892 (0.004)
GBPMYR: 5.4824 (0.011)
US: 10-yr yield (%) 4.5764 (-0.051)
BNM:10-yr yield (%) 3.788 (-0.003)

Asia/US. Asian markets ended cautiously higher as investors weighed the flurry of Trump 2.0 executive orders coupled with a more measured global trade policies and tariffs (no details yet on China and a universal tariff except for 25% on Mexico and Canada). Sentiment remained cautious ahead of the key central bank decisions, notably from the BOJ (Jan 24), ECB and FOMC (Jan 30). 

The Dow rallied 538 pts to 44,025 as Wall St anticipated a strong 4Q24 results season (expected to grow +12% YoY, the best since 4Q21) and believed Trump’s stance on global trades and tariffs won’t be as harsh as feared. 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 3rd day (+8.1 pts to 1,580.5) after plunging from a high of 1,644.5 (31 Dec) to a low of 1,545.7 (Jan 17), driven by bargain hunting in PMETAL, YTL, SUNWAY, PBBANK, YTLPOWR and TM. Investors are hopeful that Trump’s pro-business policies could prompt a recalibration of the widely criticized AI Diffusion framework, which had triggered a knee-jerk rout in the broader market, particularly in DC and AI-related stocks, over the past few days. Foreign net selling continued for the 14th day in Jan (-RM23m, Jan: -RM2.09bn, 2024: -RM4.2bn) alongside local retailers (-RM40m, Jan: +RM661m, 2024: -RM5.74bn) while local institutions (+RM63m, Jan: +RM1.43bn, 2024: -RM9.95bn) were major net buyers.

Technical view From a 3M high of 1,644.5 (Dec 31), KLCI tumbled to a low at 1,545.7 (Jan 17) before staging a relief rally to end at 1,580.5 yesterday. Following the piercing pattern on Jan 17, KLCI is poised for a downtrend reversal, challenging 1,589 (61.8% FR), 1,600, 1,612 (200D MA) and 1,625 (38.2% FR) levels. On the contrary, a decisive breakdown below 1,545-1,550 could trigger more declines towards 1,529 (Aug 5 low) and 1,500 levels. 

Outlook The technical rebound over the last three days may continue this week towards 1,589-1,600 (support: 1,529-1,550) zones amid bottoming up technical readings. However, gains could be capped at 1,612-1,625 zones, as investors assess: (i) Trump 2.0 policies; (ii) China’s economic challenges; (iii) continued foreign exodus, and (iv) upcoming major central bank decisions, notably from the BOJ (Jan 24), ECB and FOMC (Jan 30). 

Technically, IOIPG (CP: RM2.16, BUY, RM4.05 TP) is attractive to bargain for recovery upside towards the RM2.28 (upper BB), RM2.37 (76.4% FR) and RM2.55 (52W high) zones, in anticipation of a triangle breakout. Key retracement support levels are pegged at RM2.10 (Jan 17 low) and RM2.00.

Source: Hong Leong Investment Bank Research - 22 Jan 2025