Cautious Ahead of US Fed Meeting

Bursa Malaysia shares ended softer on range bound trade Wednesday, as investors traded cautiously ahead to the start of the U.S. Federal Reserve’s two-day monetary policy meeting, which will ultimately decide the interest rate direction. Still, the KLCI ended 1.32 points up at 1,436.49, off a high of 1,438.45 and low of 1,432.27, as gainers beat losers 464 to 399 on steady turnover of 3bn shares worth RM2.18bn.

Resistance at 1,450/1,465; Support at 1,400/1,390

The local market should extend sideways trade amid caution ahead of the US central bank’s policy meeting and the inflation data this week, which could decide the direction of a range of interest rates. On the index, immediate overhead resistance remains at 1,450, with 1,465/1,470, and the 1,490/1,500 area acting as tougher upside hurdles. Immediate support stays at 1,400, with 1,390 and the end June low of 1,370 acting as crucial supports.

Bargain Genting Berhad & GENM

Further weakness on Genting Berhad would be attractive to bargain for rebound upside, with a confirmed breakout above the 200-day ma (RM4.38) to aim for the 76.4%FR (RM4.56) and RM4.70 ahead, while the 50%FR (RM3.91) cushions downside. Genting Malaysia will need convincing breakout above the 61.8%FR (RM2.60) to enhance upward momentum and target the 76.4%FR (RM2.74) and RM2.90 going forward, while the 38.2%FR (RM2.38) cushion downside.

Asian Market Rose On Fed Optimism

Asian markets rose on Wednesday as a dovish shift in tone from Federal Reserve officials had traders paring U.S. interest rate expectations, though with a wary eye on U.S. inflation data due on Thursday. Wagers on whether the Fed might hike again this year have pulled back a bit this week and Treasury yields have come sharply down from 16-year highs, yanking the dollar with them. Fed Bank of San Francisco President Mary Daly said tighter financial conditions may mean the central bank “doesn’t have to do as much,” the latest in a string of softer commentary that raised hopes interest-rate hikes may be done for now. A Bloomberg News report on China preparing stimulus to help its economy also supported the mood, though nerves remained as giant developer Country Garden warned it wasn't going to be able to meet its offshore payment obligations on time.

Investors will be watching for any hints in the September Fed meeting minutes due on late Wednesday that would suggest the central bank may not follow through with the last hike indicated in its economic projections. South Korea’s Kospi closed 1.98% higher at 2,450.08, hitting a two-week high as chip giant Samsung Electronics jumped 2.71%. In Australia, the S&P/ASX 200 climbed 0.68% and closed at 7,088.40, extending gains for a fifth straight day. Japan’s Nikkei 225 rose 0.60%, ending at 31,936.51, while Hong Kong’s Hang Seng index rose 1.29% to 17,893.10.

Wall Street Finish Higher as Traders Parse Fed Minutes

Wall Street’s main indexes closed higher in choppy trade with the release of minutes from the U.S. Federal Reserve's last meeting showing caution among policy makers that helped fuel investor hopes that rates would stay steady. The Dow Jones Industrial Average rose 0.19% to close at 33,804.87. The S&P 500 gained 0.43% to 4,376.95, while the tech-heavy Nasdaq Composite added 0.71% to 13,659.68. Minutes from the central bank's last meeting released overnight confirmed that Fed members saw one more hike in the bank's two remaining meetings this year, but the inflation picture that emerges from this week will fuel expectations for what the bank decides Nov. 1. More traders are now betting the Federal Reserve won't hike interest rates at its November meeting, as the recent surge in bond yields is seen as effectively doing the tightening work of the central bank.

Meanwhile, Treasury yields continued to retreat from 16-year highs hit during the bond selloff after Israel stepped up its bombardment of Gaza. The benchmark 10-year yield dropped to trade below 4.6%, compared with last week's peak above 4.88%. Traders also largely shrugged off a Labor Department report showing producer prices in the U.S. increased by slightly more than expected in the month of September. Later today, the Labor Department is scheduled to release its more closely watched report on consumer price inflation in the month of September.

Source: TA Research - 12 Oct 2023