The FBM KLCI has taken a break after a two-day rebound, with the selling pressure
noticed within Nestle and PCHEM. Also, the profit taking activities emerged on Wall
Street ahead of the jobs data which may indicate the direction of the Fed’s rate policy
going forward. The market is looking at a pause for the interest rate this year, and
could be expecting a rate cut as soon as March next year. Do note that the next
FOMC meeting will be held on 12-13 Dec. Meanwhile, we believe the ongoing
geopolitical tension in the Middle East may be dampening the overall market
sentiment as well, limiting the upside potential on the global and local stocks
markets. On the commodity markets, the Brent oil prices declined more than 1% to
trade around USD78/bbl despite the additional production cuts by the OPEC+
members.
Sector focus: The positive sentiment may sustain in the REIT sector if the OPR is
maintained at this level. Meanwhile, we believe traders should avoid the O&G sector
given the weak Brent crude oil prices. We expect traders to focus on the window
dressing opportunities this month within the government linked corporations that
are in the Construction and Property sectors. Also, the usual sector that may surge
will be the Banks.