Choppy Waters Ahead Amid Tariffs’ Fluidity and Upcoming Feb Results Season

Technical Stkpick: SCGBHD

KLCI: 1553.63 (-3.3)
DOW: 44421.91 (-122.8)
MSCI Asia: 179.96 (-4.1)
FCPO (RM): 4369 (2)
BRENT (USD): 75.96 (-0.8)
USDMYR: 4.4755 (0.018)
SGDMYR: 3.2729 (-0.017)
EURMYR: 4.5786 (-0.05)
AUDMYR: 2.7471 (-0.029)
GBPMYR: 5.4989 (-0.041)
US: 10-yr yield (%) 4.555 (0.016)
BNM:10-yr yield (%) 3.792 (0.011)

Asia/US. Asian markets fell broadly, with Nikkei 225 sliding 2.66%, as Trump’s tariffs on Mexico, Canada and China, as well as looming target against the EU, stoked fears of a global trade war and dampening economic growth. The Dow slipped 122 pts to 44,421, bouncing back from an early 666-pt plunge, fuelled by a solid rebound in the US Jan ISM manufacturing data and a one-month delay in the US tariffs on Mexico and Canada. On earnings front, PLTR prices rallied 18% post market amid upbeat earnings. This week, attention turns to key jobs data, consumer sentiment index reports, with major earnings results due from AMZN, GOOG, MRK, AMD, QCOM, DIS and HON. 

Malaysia. Tracking US and regional markets’ slump, KLCI slid as much as 10.2 pts before paring the losses to 3.3 pts at 1,553.6. Market breadth reversed to 0.65 vs 1.59 last Friday while trading volume surged 41% to 2.08bn shares valued at RM1.75bn. Foreign net outflows continued for the 21st day YTD (Feb:-RM152m, Jan: -RM3.13bn, YTD25: -RM3.28bn) while local institutions (Feb: +RM131m, Jan: +RM1.92bn, YTD25: +RM2.05bn) and local retailers (Feb: +RM21m, Jan: +RM1.21bn, YTD25: +RM1.23bn) were the major net buyers.

Technical view KLCI’s downtrend may persist with major support pegged at 1,545 (Jan 17 low) and 1,529 (Aug 6 low) levels, unless it breaks above the upper trendline near 1,580 successfully. On the upside, immediate hurdles are seen at 1,566 (76.4% FR) and 1,580 zones, with a confirmed breakout to aim for 1,600 and 1,613 (200D MA) territory.

Amid the external headwinds and negative KLCI technical readings, the index is likely to continue its consolidation mode (support: 1,530-1,545; resistance: 1.566-1,580-1,600), 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, SCGBHD (CP: 1.11, Non-rated, TP: RM1.45) is set for further recovery following the Hammer pattern on Jan 28. A confirmed breakout above RM1.13 (50D MA) could spur greater upside at RM1.18 (30D MA) and RM1.24 (61.8% FR) zones while major support levels are pegged at RM1.00-1.05.

Source: Hong Leong Investment Bank Research - 4 Feb 2025