BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Market conditions turned sour following the spate of interest rate hikes by the US Federal Reserve and Bank Negara Malaysia (BNM) with talks of further rate hikes to combat inflation sending Malaysian equities sharply lower yesterday.
Profit taking erased some of the recent gains by leaving the FBM KLCI at the 1,420-support level. Lower liners and broader market shares also followed suit with market breadth decidedly negative. Traded volumes, meanwhile, rose slightly for the day.
The market’s reversal yesterday has broken the FBM KLCI uptrend and conditions are looking uncertain again.
The key index is also left at the crossroads as the 1,420 level may give way that could further extend the downward streak.
While mild buying support may emerge to keep the key index above the 1,420 level, buying is likely to remain insipid as Malaysian equities could mirror the performance of global indices that are still reeling from the latest interest rate hike.
Therefore, the downsides are more likely to persist with the FBM KLCI’s supports now pegged at 1,411 points before the next psychological support of 1,400 level comes into play. The hurdles, meanwhile, are at 1,425 and 1,430 points respectively.
Malacca Securities Research
The FBM KLCI plunged after the hawkish remarks from the US Fed; foreign investors turned net seller as outflows from Malaysia accelerated (five-day net foreign selling: -RM114.5 mil).
We believe the local bourse’s performance may be impacted by the gloomy sentiment over the near term as investors anticipate further interest rate hikes by the US Fed to tackle inflation, contributing to the recession fears.
However, investors may position themselves ahead of the 15th General Election (GE15) and the November reporting season.
Commodities-wise, Brent crude price hovered slightly below US$95/barrel while crude palm oil (CPO) traded above RM4,350/metric tonne.
The FBM KLCI plummeted to close below its immediate support at 1,440 and its daily EMA20 level. Technical indicators, however, remained positive as the MACD Histogram extended a positive bar while the RSI hovered above 50.
The next support is monitored at 1,400, followed by 1,370 while the resistance is set at 1,440-1,460. – Nov 4, 2022
