The stunning Dow record closing may drive KLCI towards 1,648-1,660 zones

Technical Stockpick: EVERGRN

KLCI: 1634.17 (13.5)
DOW: 43729.93 (1508.1)
MSCI Asia: 187.27 (-0.6)
FCPO (RM): 4924 (7)
BRENT (USD): 74.92 (-0.61)
USDMYR: 4.4035 (0.058)
SGDMYR: 3.3106 (0.012)
EURMYR: 4.736 (0.002)
AUDMYR: 2.9 (0.024)
GBPMYR: 5.6814 (0.039)
US: 10-yr yield (%) 4.4315 (0.161)
BNM:10-yr yield (%) 3.92 (0.027)

Asia/US. Asian markets ended mostly higher as the resolution to the US presidential election had removed a major source of uncertainty for investors after Trump was elected as the US 47th President. In contrast, SHCOMP curbed early gains to end flattish as a Trump victory could lead to higher tariffs on Chinese goods, heralding more economic pressure on the country amid ongoing deflation and a struggling property sector. The Dow rallied 1,508 pts to a record close of 43,730, fuelled by the removal of election uncertainty, as investors shifted their focus to the prospects of a Trump 2.0 presidency in anticipation of pro-growth policies to stimulate US economy. Meanwhile, attention also turned to the Fed’s policy decision on Nov 7, with markets pricing in a 98% chance of a 25-bps cut, following Sep's 50-bps reduction. 

Malaysia.  Tracking higher regional markets, KLCI soared 13.5 pts at 1,634.2 to record its 4th consecutive gain, led by TENAGA, PMETAL, YTL, YTLPOWR, PBBANK and CIMB. Market breadth was bullish at 2.41 vs 1.08 previously, supported by 3.40bn shares traded valued at RM2.92bn. Foreign institutions were the major net buyers (+RM92m, Nov: +RM14m, YTD: +RM1.79bn) alongside local institutions (+RM22m, Nov: +RM212m, YTD: +RM3.16bn) while local retailers (-RM114m, Nov: -RM226m, YTD: -RM4.95bn) emerged as net sellers for the 4th straight day. 

Outlook The impressive Dow record closing overnight should buoy the lacklustre local market, targeting 1,648-1,660 zones in the near term before awaiting the FOMC meeting verdict (Nov 7), alongside the start of the Nov earnings season (support: 1,607-1,625). Technically, after correcting 32.2% from 52W high of RM0.435 to RM0.295, EVERGRN (FIG#3) is in base building mode, with key supports at RM0.255-RM0.285 cushioning downside. A successful breakout above the RM0.31 (50D MA) could extend upside momentum towards RM0.33 (200D MA) and RM0.35 territory.

Source: Hong Leong Investment Bank Research - 7 Nov 2024