The FBM KLCI closed a turbulent session mildly higher on Friday along with the regional peers as investors have priced in concerns over a potential recession moving forward. However, given the sharp gains on Wall Street overnight, investors’ narrative may have changed for now and may look out for opportunities within the stock market as most of the stocks were bashed down and oversold over the past weeks. On a side note, we believe the optimism in poultry sector may fade following the Prime Minister’s decision to retain the ceiling price of chicken.

The FBM KLCI finished little changed amid positive bias regional performances. While the overnight gains on Wall Street may spill over to the local bourse, we reckon any gains should be short-lived on the back of mounting concerns over potential recession as well as the inflationary pressure that may hit corporate earnings going forward.

The FBM KLCI tumbled more than 1.8% along with regional peers as pervasive fears over recession rippled through the markets. We believe the sentiment will remain negative-bias as investors mulled the US Fed Chairman’s testimony on the commitment in interest rate hikes to tame inflation, while eyeing Malaysia’s and Japan’s inflation rate tomorrow. Nevertheless, the oversold stocks may still look attractive for bargain hunting activities. Commodities prices have shown a downtrend move amid growing recession worries.

Overall, the sentiment has improved across the regional markets, which has helped the FBM KLCI to rebound from its 52-week low. Moreover, following the strong rebound on Wall Street overnight of over 2.0%, the local bourse may see further recovery supported by bargain hunting activities. We believe most of the sectors that have been bashed down earlier should gain traction at least for the near term. Nevertheless, investors are still weighing on the risk of recession arising from global inflation, hence traders may adopt a sell into strength strategy.

The FBM KLCI extended losses amid mixed performance on regional bourses amid global recession worries. However, we believe stocks on the local bourse are oversold and could be due for bargain hunting opportunities, but overall market sentiment should remain challenging in the near term on the back of prospect of few more rounds of rate hikes; thus, the rebound might be short-lived.

The FBM KLCI extended its whipsaw moves on Friday in a broad sell-off amid growing worries on inflationary pressure and recession fears. As sentiment on Wall Street remained fragile following the mixed performance overnight, we foresee investors to remain cautious in the near future. Any of the rebound move is likely to be short-lived as traders might be adopting a selling-into-strength strategy for now. The head of NATO warned of a long Russia-Ukraine war, which may prolong inflation and further derail global economic recovery.

Although there were signs of rebound on the FBM KLCI, the pace of recovery is expected to be measured over the foreseeable future. Following the weakness on Wall Street overnight, we believe that volatility will remain a feature on stocks across Bursa exchange amid the un-easing concerns over rising risk of recession stemmed by persistently high inflation and on-going monetary tightening environment. The lower liners may face another round of selloffs as investors are likely to unwind their position as market uncertainties prevails.

Following the conclusion of the two-day US FOMC meeting that saw the pace of the interest rate hike came in line with market expectations, we think that markets conditions should turn calmer. Mild bargain hunting activities may emerge at least for the near term after majority of the stocks have fallen into the oversold territory. Still, we reckon that the lack of fresh market catalysts and anxieties over the lingering inflationary pressure could result in market environment to remain wary and cautious overtime, which may keep the upside limited.