Range Bound Pending Monetary Policy Updates

Stocks drifted lower on Wednesday, as investors remained wary over China’s October factory activity contraction and ahead of the US Federal Reserve’s decision on interest rates. The FBM KLCI fell 6.81 points to close at 1,435.33, off an early high of 1,441.59 and low of 1,434.93, as losers beat gainers 562 to 319 on lower turnover of 2.8bn shares worth RM1.8bn.

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

The local market should stay range bound pending monetary policy decisions from key global central bankers, and ahead of Bank Negara’s monetary policy statement. Immediate overhead resistance for the index 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, followed by 1,390, with the end June low of 1,370 acting as crucial support.

Bargain SKP Resources & VSI

SKP Resources is ripe for oversold rebound after the recent selldown, with key supports from the lower Bollinger band (77sen) and 70sen cushioning downside, while resistance at 92sen and the 76.4%FR (RM1.02) restrict near-term upside. VSI should rebuild support at current levels, with downside cushioned by the 200-day ma (88sen) and 85sen, and immediate upside hurdles seen at the 38.2%FR (97sen) and 50%FR (RM1.04).

Asian Markets Rose Ahead of Fed Policy Decision

Asian markets rose on Wednesday as traders look ahead to an interest rate decision by the US central bank and digested a slew of economic data across the region. The Fed will conclude its two-day monetary policy meeting later in the day, with markets expecting the central bank to stand pat on interest rates. Traders will scrutinize what Fed Chair Jerome Powell says in his post-policy meeting comments to gauge the path of interest rates and how long rates will stay elevated. On economic news, China's factory activity unexpectedly contracted in October, a private survey showed on Wednesday, adding to a downbeat official manufacturing survey the previous day and raising questions over the country's fragile economic recovery at the start of the fourth quarter.

Separately, data showed South Korea’s October exports climbed 5.1% year-on-year, the first time in 13 months, while its factory activity saw a slightly deeper contraction. Traders are also looking to guidance from the ongoing earnings season to assess the outlook for profits and how companies are able to withstand headwinds like higher rates. Japan’s Nikkei 225 rose 2.41% to 31,601.65, while Australia’s S&P/ASX 200 closed 0.85% higher at 6,838.30. South Korea’s Kospi also gained 1.03% to 2,301.56 and the Shanghai Composite index rose 0.14% to 3,023.08.

Wall Street Extend Gains After Fed Keeps Rate Unchanged

All three major US stock indexes closed higher overnight after the U.S. Federal Reserve kept interest rates unchanged and leaves the door open for potential future rate hikes. The Dow Jones Industrial Average advanced 0.67% to 33,274.58. The S&P 500 climbed 1.05% to 4,237.86, while the Nasdaq Composite jumped 1.64% to 13,061.47. The strength on Wall Street came after the Federal Reserve kept interest rates unchanged for a second consecutive time, as widely expected. Fed Chair Jerome Powell said policy makers would proceed carefully although they were not yet confident financial conditions were restrictive enough to get inflation as low as the central bank would like. The accompanying statement suggested the Fed is still considering additional rate hikes in an effort to return inflation to its 2% objective, but traders seem optimistic the recent cycle of increase is over.

The market also got a boost from falling bond yields after the U.S. Treasury Department said it will slow the pace of increases in its longer-dated debt auctions in the November-January quarter and expects it will need one more additional quarter of increases after this to meet its financing needs. Facebook-owner Meta and chip-maker Nvidia led the pack by advancing more than 3.5% apiece, while Amazon.com posted a 2.9% gain. Semiconductor companies Advanced Micro Devices and Micron Technology added 9.7% and 3.8%, respectively.

Source: TA Research - 2 Nov 2023