Sentiment to Stay Cautious Ahead of the US Polls (Nov 5) and FOMC Meeting (Nov 7)

Technical Stockpick: YTLPOWR

KLCI: 1603.98 (2.1) DOW: 42052.19 (288.7) MSCI Asia: 185.09 (-1) FCPO (RM): 4868 (172) BRENT (USD): 73.1 (-0.06) USDMYR: 4.3807 (0.003) SGDMYR: 3.3076 (-0.002) EURMYR: 4.7568 (0.007) AUDMYR: 2.8764 (-0.001) GBPMYR: 5.6554 (-0.012) US: 10-yr yield (%) 4.3836 (0.099) BNM:10-yr yield (%) 3.921 (0.003)

Asia/US. Mirroring a bearish Wall St and a 2.6% slide in Nikkei 225, Asian markets ended lower as investors weighed a rebound in Yen (dampened the export-heavy stocks) following a less dovish remarks from the BOJ, and the crucial upcoming US polls (Nov 5), FOMC meeting (Nov 7) coupled with China’s NPC (Nov 4-8). After plunging 1513 pts over 8 of the last 9 trading days, the Dow rebounded 289 pts at 42,052, fuelled by strong earnings from AMZN (+6.2%), INTL (+7.8%) and CVX (+2.9%), overshadowing the Oct’s dismal NF payrolls (impacted by severe hurricanes and a major strike) and ISM manufacturing PMI. This week, the US polls are set to be the most globally watched event, along with the Fed rate verdict and policy outlook.

Malaysia.  After sliding 95 pts from YTD high of 1,684 to 1,589 (2M low) last Friday, KLCI staged a long-awaited technical rebound to end +2.1 pts at 1,604. However, cautious sentiment prevailed ahead of the US polls and FOMC meeting, reflected by the negative market breadth for the 6th day at 0.79 vs 0.54 previously. Foreign institutions were the major net sellers for the 7th straight session (-RM71m, WoW: -RM1.01bn, YTD: +RM1.71bn) alongside local retailers (-RM6m, WoW: +RM49m, YTD: -RM4.73bn) while local institutions (+RM77m, Wow: +RM961m, YTD: +RM3.02bn) emerged as the major net buyers. 

Outlook Ahead of the 3Q24 local results season, the KLCI is likely to consolidate further (support: 1,566-1,578-1,591; resistance: 1,616-1,625-1643) due to a lack of domestic rerating catalysts and continued foreign net outflows for a 2nd consecutive week (WoW: -RM1.01bn; Oct: -RM1.77bn). Moreover, the outlook may be tempered by external risks, including lingering Middle East turmoil, US elections, and uncertainties surrounding China's stimulus measures and its economic recovery plans. 

Technically, after diving 41.5% from all-time high of RM5.47 (May 21) to RM3.20, YTLPOWR needs a confirmed breakout above the downtrend channel (near RM3.43 or 20D MA) to extend upside momentum towards RM3.66 (50% FR), RM4.00 and RM4.19 (200D MA) levels, with support at RM3.00, RM2.84 (weekly lower BB) and RM2.72 (76.4% FR).

Source: Hong Leong Investment Bank Research - 4 Nov 2024