Liquidity Boost Needed to Sustain Upside

The local blue-chip benchmark index rose on Thursday, following the broadly positive cues from regional markets, as investors cheered dovish Fed talk as well as reports that China is mulling fresh stimulus to boost slowing growth in the world's second-largest economy. The FBM KLCI gained 7.33 points to close at 1,443.82, off an early low of 1,437.96 and high of 1,446.06, as gainers beat losers 587 to 341 on steady turnover of 3.38bn shares worth RM2.02bn.

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

While sentiment has improved somewhat, stronger buying momentum and liquidity boost on the domestic market will be needed to promote sustained rise to higher ground. On the index, immediate overhead resistance stays at 1,450, with 1,465/1,470, and the 1,490/1,500 area acting as tougher upside hurdles. Immediate support remains at 1,400, with 1,390 and the end June low of 1,370 acting as crucial supports.

Bargain Maxis & TM

Maxis remains in base building mode at current levels, pending decisive breakout above the upper Bollinger band (RM4.20) to challenge the 16/6/23 peak (RM4.50), with next hurdle seen at the 123.6%FP (RM4.86), and key retracement support at the 50%FR (RM3.74). TM will need convincing breakout from consolidation, with a successful climb above the 50%FR (RM5.10) to aim for the 61.8%FR (RM5.26) and 76.4%FR (RM5.47) ahead, while key retracement support from the 23.6%FR (RM4.73) cushions downside.

Asian Markets Ends Higher On Rate Optimism

Asian markets rose on Thursday, after the minutes of the US Fed's latest monetary policy meeting reiterated that a majority of participants expect one more interest rate hike will likely be appropriate before the end of the year. Federal Reserve minutes showed a growing sense of uncertainty around the path of the U.S. economy, with volatile data and tightening financial markets posing risks to growth and leading policymakers to extend a rate pause last month. The recent buoyancy in sentiment also owe much to comments from more Fed officials suggesting rates there may have peaked, which triggered a welcoming pullback in Treasury yields.

Traders’ focus is now turning US consumer price data, which economists are forecasting will show a further easing in inflation. A move by China’s sovereign wealth fund to buy shares of the country’s largest banks also fueled further optimism. Hong Kong’s Hang Seng index jumped 1.93% to 18,238.21, while Shanghai Composite Index added 0.94% to 3,107.90. In Australia, the S&P/ASX 200 added 0.21% to close at 7,091.00. In Japan, the Nikkei 225 ended 1.75% higher at 32,494.66, while South Korea’s Kospi finished up 1.21% at 2,479.82.

Wall Street Finish Lower as Traders Digest Inflation Data

Wall Street’s main indexes finished lower overnight, breaking a four-day winning streak, as bond yields tracked higher and data showed U.S. consumer prices rose more than anticipated in September, clouding the Federal Reserve's interest rate outlook. The Dow Jones Industrial Average fell 0.51% to close at 33,631.14. The S&P 500 lost 0.62% to 4,349.61, while the Nasdaq Composite dropped 0.63% to 13,574.22. The major indexes ended a four-day winning streak. A renewed surge by treasury yields weighed on Wall Street, with yields regaining ground following a notable two-day pullback. The rebound by yields came after the Labour Department released a report showing U.S. consumer prices rose by slightly more than expected in the month of September. The benchmark 10-year rate moved nearly 11 basis points higher to 4.70%.

Traders still overwhelmingly expect the Federal Reserve to keep interest rates at their current level at its next meeting, according to CME Group's Fed Watch tool. Meanwhile, third-quarter earnings season gets under way for the S&P 500 on late Friday with results from some of the big U.S. banks and other companies. Among the S&P 500's 11 major industry sectors, the biggest decliner was materials ending down 1.5%. The rise in yields particularly pressured ratesensitive sectors such as utilities down 1.5% and real estate down 1.3%, its second and third biggest decliners.

Source: TA Research - 13 Oct 2023