BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Malaysian stocks continue to lose ground yesterday in tandem with weakness in most global stock indices that reacted negatively to the US Federal Reserve’s intention to keep interest rates elevated for longer.
As a result, the FBM KLCI slipped below the psychological 1,450 level at the close with most lower liners and broader market shares following suit.
Market breadth was also negative amid the increased selling pressure with traded volumes slipping from a day earlier.
We see market conditions remaining guarded as market players continue to digest the prolonged high interest rate environment whereby the US Fed could still hike the rates one more time before year-end.
The high interest rate environment could further dent the economic outlook, leading to a more pronounced slowdown in the demand for goods and services in the coming months.
This could cause a more subdued equity market environment as market players retreat to the sidelines until there is more clarity in its direction.
Meanwhile, the breach of the 1,450 level could also leave the FBM KLCI more cautious and prolonging its ongoing downward streak, particularly as many global indices are still down-trending. With this development, the key index is likely to end the week on another meek note.
There is an interim support at 1,447 points, followed by the 1,440-1,443 levels. The hurdles are at 1,450 points and 1,455 points respectively.
Malacca Securities Research
The FBM KLCI traded in the negative region at the end of the session in tandem with the regional benchmark performances.
Also, Wall Street has dropped significantly with the US Fed’s tone turning more hawkish in the recent Federal Open Market Committee (FOMC) meeting.
Moreover investors were concerned that a government shutdown may provide downside risk to the 4Q 2023 US gross domestic product (GDP).
Hence, with the sentiment turning negative, it is likely to spill over on stocks on the local front.
However, we opine that the domestic catalysts such as the National Energy Transition Roadmap (NETR) and New Industrial Master Plan (NIMP 2030) – coupled with the upcoming Budget 2024 – will provide buying support within a certain sector at least for the near term.
Commodities-wise, Brent crude has continued to retrace from its recent high to trade around the US$93/barrel level while crude palm oil (CPO) prices extended their pullback formation below the RM3,700/metric tonne level.
The FBM KLCI ended lower and dropped below the 1,450 psychological level. Also, the technical readings on the key index were negative with the MACD Histogram forming a rounding top formation while the RSI dropped below 50.
The resistance is located around 1,465-1,470 while the support is envisaged around 1,430-1,440. – Sept 22, 2023
