Market to Remain Edgy Ahead of US Polls (Nov 5) and FOMC Meeting (Nov 7)

Technical Stockpick: RGB

KLCI: 1616.43 (12.5)
DOW: 41794.6 (-257.6)
MSCI Asia: 186.3 (1.2)
FCPO (RM): 4848 (-43)
BRENT (USD): 75.08 (1.98)
USDMYR: 4.374 (-0.007)
SGDMYR: 3.3208 (0.013)
EURMYR: 4.7661 (0.009)
AUDMYR: 2.8843 (0.008)
GBPMYR: 5.6738 (0.018)
US: 10-yr yield (%) 4.2847 (-0.099)
BNM:10-yr yield (%) 3.923 (0.002)

Asia/US. Most Asian bourses rose, buoyed by optimism that China’s NPC (Nov 4-8) is expected to provide more insights on debt and fiscal initiatives to stimulate economic growth. However, concerns over the upcoming US polls (Nov 5) and FOMC meeting (Nov 7) tempered overall gains. The Dow slid 258 pts to 41,794 while the US10Y bond yield slipped 10 bps at 4.28% as investors geared up for the US polls and FOMC meeting verdict this week. Meanwhile, volatility could stay elevated amid concerns of delayed US policy clarity due to potential legal and procedural issues, should the likelihood of a disputed result drag the votes count for weeks. 

Malaysia.  In line with higher regional markets, KLCI continued its technical rebound for a 2nd day (+12.4 pts to 1,616) after sliding 95 pts from YTD high of 1,684 to 1,589 (2M low) last Friday. Market breadth improved to 1.11 from 0.79 last Friday, marking its 1st gain in seven days. Foreign institutions were the major net buyers after net sold RM1.35bn in 7th consecutive session (+RM162m, Nov: +RM91m, YTD: +RM1.87bn) while local retailers (-RM82m, Nov: -RM88m, YTD: -RM4.81bn) alongside local institutions (-RM80m, Nov: -RM3m, YTD: +RM2.94bn) emerged as the major net sellers. 

Outlook Ahead of the 3Q24 local results season, the KLCI is likely to consolidate further (support: 1,566-1,582-1,592; resistance: 1,625-1,638-1648) due to the lack of convictions and investors gear up for the US polls and the FOMC meeting verdict this week. Moreover, the outlook may be tempered by external risks, including lingering Middle East turmoil and uncertainties surrounding China's stimulus measures and its economic recovery plans. 

Technically, after tumbling 24.5% from all-time high of RM0.51 (July 5) to RM0.385, RGB is poised for a downtrend line breakout soon. A confirmed breakout above RM0.40 could extend upside momentum towards RM0.42 (38.2% FR), RM0.455 (23.6% FR) and RM0.485 (weekly upper BB) levels, with support at RM0.355 (Aug 5 low) and RM0.335 (76.4% FR) region.  

Source: Hong Leong Investment Bank Research - 5 Nov 2024