All Eyes on the FOMC Decision 

Technical Pick: SENDAI

KLCI: 1608.75 (6.7)
DOW: 43828.06 (-86.1)
MSCI Asia: 185.55 (-2)
FCPO (RM): 4906 (-15)
BRENT (USD): 74.49 (1.08)
USDMYR: 4.45 (0.013)
SGDMYR: 3.2992 (-0.004)
EURMYR: 4.6665 (0.003)
AUDMYR: 2.8328 (-0.014)
GBPMYR: 5.624 (-0.039)
US: 10-yr yield (%) 4.3967 (0.069)
BNM:10-yr yield (%) 3.781 (0.001)

Asia/US. Ahead of the crucial FOMC meeting on Dec 18, Asian markets ended mostly lower in line with Wall St, as traders weighed a higher than expected US PPI. Sentiment was also dampened by the lack of concrete policy details in China's CEWC to boost consumption amid a sluggish economy and the ongoing threat of US tariffs, The Dow fell 86 pts to 43,828 to notch its losing streak for the 7th day as traders exercised caution ahead of the FOMC meeting on Dec 18. While there is a broad expectation of a 25 bps cut this week, the slowing disinflation trend may prevent the Fed from pursuing more aggressive cuts in 2025. Other significant data releases will include PCE inflation; S&P Global’s manufacturing and services PMIs and the final 3Q24 GDP data.

Malaysia. After falling 13.5 pts in the last 5 days, KLCI staged a 6.7-pt technical rebound at 1,608.8, led by TENAGA, SUNWAY, PMETAL, TM, MISC and YTL. Market breadth was positive at 1.25 vs 0.81 previously, though trading volume was thin at 2.78bn shares (vs Dec avg: 3.06b) valued at RM2.40bn (Dec avg: RM3.16bn). Foreign institutions emerged as the net sellers for the 18th day (-RM46m, Dec: -RM1.64bn, YTD: -RM2.96bn) alongside local retailers (-RM83m, Dec: -RM412m, YTD: -RM5.35bn) whilst local institutions (+RM129m, Dec: +RM2.05bn, YTD: +RM8.32bn) emerged as the major net buyers for the 18th straight session.

Outlook Ahead of the FOMC decision on Dec 18, KLCI could trend sideways, with major supports pegged at 1,586-1,600 levels amid persistent foreign net outflows. Nevertheless, a successful breakout above the downtrend resistance at 1,615 could spur greater upside towards 1,625-1,640-1,648 levels, supported by the potential “window dressing” effect in Dec. Historically, this seasonality has had a 90% success rate over the past 10-20 years, with positive returns ranging from 1.5%-1.8%. 

Technically, after sliding 46.5% from 52W high at RM0.785 (May 13) to a low of RM0.42 (Aug 29), SENDAI (CP:RM0.56, BVPS: RM0.38) has been traded in a range bound mode within RM0.46-0.625 zones. A confirmed breakout above RM0.625 (Dec 4) would enhance further upside targeting RM0.645 (61.8% FR) and RM0.70 (76.4% FR). Key retracement supports are pegged at RM0.535 (100D MA) and RM0.50 (200D MA) levels. 

Source: Hong Leong Investment Bank Research - 16 Dec 2024