With most technical indicators deteriorating Consumer Price Index (CPI) especially #Food #Non-alcoholic-beverages

DESPITE the firmer external tone due to robust economic data, which is generally supportive of global growth, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was dragged lower last week by foreign selling on selected key blue chips.

On the other hand, while blue chips stayed in sideways trade, active rotational trading plays on penny small caps and ACE Market stocks with positive news flows highlighted active retail participation on the broader market.

For the week, the FBM KLCI slipped 8.68 points, or 0.49 per cent, to close at 1,755.32 as gains on Petronas Gas Bhd (+50 sen), Hong Leong Bank Bhd (+14 sen), and IHH Healthcare Bhd (+13 sen) were overshadowed by losses in British American Tobacco 
(-54 sen), Genting Bhd (-24 sen), Hong Leong Financial Group (-18 sen) and Genting Malaysia Bhd 
(-12 sen). Average daily traded volume and value surged to 3.26 billion shares worth RM2.01 billion, compared with the 2.45 billion shares and RM1.93 billion average the previous week as the average daily volume was fuelled by robust trading in penny stocks from retailers.

News flows from China and the United States could influence the financial markets this week. China will begin its 19th national congress on Wednesday, when our market is shut for the Deepavali holidays. President Xi Jinping, who should retain his position in this twice-a-decade political meeting, is expected to outline his party's key agenda for the next five years. This will have big implication on China and wider impact on the rest of the world.

To begin with, China's announcement of trade data for last month has started off on the right foot. It affirmed improved outlook for the economy and vindicated the International Monetary Fund's recent upgrade of its economic growth forecasts for China by 0.1 percentage point to 6.8 per cent and 6.5 per cent for this year and the next, respectively. The country's third-quarter gross domestic product, which will be released on Thursday, is expected to meet consensus growth forecast of 6.8 per cent.

On the US front, the Federal Reserve will release its Beige Book on Thursday. It will provide important indicators on the state of the US economy and influence the monetary policy decision.

Locally, the Consumer Price Index (CPI) for last month will be released on Friday. It should not deviate much from consensus expectations of 4.2 per cent year-on-year growth versus August's 3.7 per cent as the sustained double-digit expansion in Transport index should fuel pricing pressure on most other CPI components, especially food and non-alcoholic beverages.

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