FBM KLCI

• The FBM KLCI declined 1.78% (28.80 points) to close at 1,592.44 last week, as global economic uncertainties and geopolitical concerns kept investor sentiment cautious. Malaysia's 3Q GDP growth met market expectations at 5.3% YoY, supported by resilient domestic demand and a recovery in the external sector. However, the healthy GDP data failed to uplift the market, as weaker MYR and persistent foreign outflows weighed on sentiment. Most subsectors posted weekly declines, except for Utilities (+0.7%) and Health Care (+0.1%). Brent crude oil prices fell 4.0% WoW, driven by a stronger USD and expectations of a market surplus in 2025.
• Looking ahead, the removal of Malaysia from the U.S. Treasury's currency monitoring list is a positive development that could support the MYR. However, persistent foreign capital outflows may continue to weigh on the currency. Federal Reserve Chair Jerome Powell's recent comments on a potential slowdown in rate cuts could also prompt fund managers to reassess their regional investment strategies. Domestically, as the 3Q earnings season progresses, reports from major Malaysian corporations are expected to shape market sentiment. Globally, attention will be on NVIDIA's earnings release on Wednesday, with Wall Street projecting USD0.74 EPS and USD33.2b in revenue, an 83% YoY increase. Any deviation from expectations and outlook guidance in NVIDIA's performance or outlook could have significant implications for global markets.
• Technically, the FBM KLCI's break below its 5 and 13-week SMAs reflects a cautious near-term outlook. Additionally, closing below the critical 200-day SMA at 1,597 last Friday, though it still managed to stay slightly above its June 2023 upward trend line, indicates sustained investor caution. A breach of this trend line could signal a new downtrend. Stochastic and RSI indicators have eased but remain above oversold levels, suggesting room for further consolidation.
• In short, we expect the market to maintain a downward bias this week, with NVIDIA's earnings results expected to significantly influence sentiment. Key support levels are at 1,589 and 1,577 (50-week SMA), while resistance stands at 1,600 and 1,615 (13-week SMA)

Source: Kenanga Research - 18 Nov 2024