Volatility Ahead Amid Tariff Jitters and Feb Results Season

Technical Pick: GAMUDA

KLCI: 1556.92 (4.2)
DOW: 44544.66 (-337.5)
MSCI Asia: 184.1 (-0.1)
FCPO (RM): 4289 (10)
BRENT (USD): 76.35 (-0.41)
USDMYR: 4.4575 (0.064)
SGDMYR: 3.2897 (0.035)
EURMYR: 4.6284 (0.05)
AUDMYR: 2.7759 (0.037)
GBPMYR: 5.5403 (0.072)
US: 10-yr yield (%) 4.5387 (0.022)
BNM:10-yr yield (%) 3.781 (0.013)

Asia/US. Asian markets ended mixed in a subdued mood, with China, Hong Kong, and Taiwan shut for the CNY holidays. Sentiment remained on the edge as investors eyed looming trade tariffs under Trump next week on Mexico and Canada (both 25%) and China (10%), and a stark warning of 100% tariffs on BRICS over de-dollarization concerns. The Dow slid 337 pts to 44,544, driven by higher PCE price index (MoM and YoY) and concerns over Trump’s tariffs on US three largest trading partners (Mexico, Canada and China). Sentiment was also dampened by a slew of mixed results from CL (EPS below est.), CAT (revenue below est.), AAPL (EPS above est.) and XOM (EPS above est.). This week, attention turns to key jobs data, ISM PMIs, consumer sentiment index reports, with major earnings results due from AMZN, GOOG, PLTR, MRK, AMD, QCOM, DIS and HON. 

Malaysia. KLCI rose 4.2 pts to 1,556.9 on technical rebound after tumbling 35.1 pts over four consecutive day. Market breadth improved to 1.59 vs 0.69 previously though daily trading volume plunged 33% to 1.47bn shares valued at RM1.92bn, as many investors were away for the CNY celebration. Foreign net outflows continued for the 20th day in Jan (-RM40m, Jan: -RM3.13bn) alongside local institutions (-RM38m, Jan: +RM1.92bn) while local retailers (+RM78m, Jan: +RM1.21bn) were the only major net buyers.

Technical view KLCI staged a 4.2-pt technical rebound from a 4-day losing streak of 35.1 pts. Unless successfully crossing above the upper trendline near 1,589 (61.8% FR), KLCI is still firmly stuck in the downtrend channel, with major support pegged at 1,545 (Jan 17 low), 1,535 (lower BB) and 1,529 (Aug 6 low) levels. On the upside, immediate hurdles are seen at 1,566 (76.4% FR) and 1,589 zones, with a confirmed breakout to aim for 1,600 and 1,613 (200D MA) territory.

Outlook Amid the external headwinds and negative KLCI technical readings, the index is likely to continue its consolidation mode (support: 1,529-1,535-1,545; resistance: 1.566-1,589-1,600), as investors monitor: (i) heightened global trade tensions and tit-for-tat measures following US tariffs; (ii) China’s economic challenges; (iii) lingering headwinds from the AI and DCs; (iv) persistent foreign funds outflow, and (iv) upcoming Feb reporting season. 

Technically, any further weakness on GAMUDA (CP: 4.04, BUY, TP: RM5.50) towards key supports at RM3.92 (76.4%FR) and RM3.85 (200D MA) should attract bargain hunting rebound towards RM4.20 (61.8% FR) and RM4.43 (50% FR) levels. A confirmed breakout could spur greater upside at RM4.66 (38.2% FR) and RM4.94 (23.6% FR) zones.

Source: Hong Leong Investment Bank Research - 3 Feb 2025