Blue chips paused for profit-taking consolidation on Tuesday after the index’s recent rally to a nine-month high, and as Australia raised interest rates on concerns inflation may stay high for an extended period. The FBM KLCI slid 1.3 points to settle at 1,463.37, after ranging between early high of 1,465.55 and low of 1,458.66, as losers beat gainers 517 to 385 on lower turnover of 3.26bn shares worth RM2.17bn.

Resistance at 1,490/1,500; Support at 1,450/1,430

Blue chips should pause for profit-taking breather after recent strong gains, as market undertone remain firm on hopes the rising global interest rates trend may end soon and pave way for rate cuts sometime next year. On the index, resistance is set at the 1,490/1,500 area, followed by 1,520 as next upside hurdle. Immediate support is now at 1,450, with 1,430, and then 1,400/1,390 as stronger support platform.

Bargain Maxis & TM

Maxis will need sustained strength above the 76.4%FR (RM4.14) to enhance upside potential for retest of the May peak (RM4.50), with a confirmed breakout to aim for the 123.6%FP (RM4.86) ahead, while the 61.8%FR (RM3.92) cushions downside. TM should meet strong profit-taking resistance on further rally towards the 76.4%FR (RM5.47) and Aug 2022 peak (RM5.80), with downside cushioned by the 200-day moving average (RM4.92).

Asian Markets Skid on Rate Jitters

Asian markets snapped a three-day winning streak on Tuesday, as fresh doubts emerged on whether global central bankers have finished tightening policy. In Asia, the Reserve Bank of Australia raised its cash rate by 25 basis points to 4.35%, saying recent data suggested there was a risk inflation would remain higher for longer. Separately, Minneapolis Fed President Neel Kashkari said it’s too soon to declare victory over inflation, despite positive signs that price pressures are easing. Traders are now predicting the central bank will lean against the recent easing in financial conditions by saying it will keep its options open on policy.

On economic news, data showed China's imports unexpectedly grew in October, while exports contracted faster than expected, in a mixed set of indicators that showed the recovery in the world's second-largest economy remains uneven. South Korea’s Kospi dropped 2.33% to 2,443.96, while the Kosdaq dropped 1.80% to 824.37. Japan’s Nikkei 225 also fell 1.34% to 32,271.82, and Topix lost 1.17% to 2,332.91. In Australia, the ASX 200 fell 0.29% to 6,977.10, while the Shanghai composite index inched down 0.04% to 3,057.27.

Tech Stocks Lead Wall Street Higher

The three main stock indices on Wall Street finished higher overnight, as a retreat in U.S. Treasury yields buoyed mega-cap growth stocks and traders sought more clarity on interest rates from the Federal Reserve. The Dow Jones Industrial Average gained 0.17% to 34,152.60. The S&P 500 added 0.28% to finish the session at 4,378.38, while the Nasdaq Composite rose 0.90% to 13,639.86. The benchmark 10-year Treasury note yield slipped to below 4.6%, down from 5% late last month on expectations the Fed is done with its rate hike cycle. Expectations that the Fed's rate hike cycle is at an end have increased in recent days, but the market remains sensitive to the possibility of more hikes, and central bank officials have been cautious in comments on the future rate path.

Traders are likely to pay close attention to Powell's remarks later in the day, looking for additional confirmation the Fed will leave interest rates unchanged for the foreseeable future. Markets are pricing in a 90.2% chance the Fed will once again hold rates steady at its December policy meeting, up from 68.9% a week ago, according to CME's Fed-Watch Tool. Some notable gainers included Amazon and Salesforce, which rose more than 2% each, while Apple, Microsoft and Meta Platforms gained about 1%. Semiconductor stocks Advanced Micro Devices, Broadcom and Intel rose ahead of the rollout of funding from the Chips Act.

Source: TA Research - 8 Nov 2023