Range Bound on Steady Market Undertone

The local market extended profit-taking breather on Wednesday, with investors sidelined pending more cues from US Fed officials on the outlook for interest rates and inflation. The FBM KLCI fell 5.77 points to close at 1,457.60, off an early high of 1,462.01 and low of 1,454.46, but buyers led losers 490 to 412 on total trade of 3.45bn shares worth RM1.97bn.

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

Stocks should stay range bound from profit-taking after the recent strong gains, with market undertone still steady on hopes global interest rates may have peaked and rate cuts should follow 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 Sime Darby & Tenaga

Sime Darby need decisive strength above the 123.6%FP (RM2.39) to further boost upside momentum towards the 138.2%FP (RM2.46), 150%FP(RM2.52) and 161.8%FP (RM2.57) ahead, while the rising 50-day ma (RM2.23) provides good uptrend support. Tenaga will need breakout confirmation above the 123.6%FP (RM10.06) to aim higher towards the 138.2%FP (RM10.38) and 150%FP (RM10.64) going forward, with uptrend support seen from the 100- day ma (RM9.58).

Asian Markets Slip as Traders Await Central Bank Speeches

Stocks in Asia inched lower in choppy trading on Wednesday, as trader’s awaited guidance from a host of Federal Reserve policymakers on the central bank's policy path for interest rates and digested economic data from the region. Traders seemed reluctant to make significant moves and will pay close attention to the Powell's statements for clues about the outlook for interest rates. Voting members such as New York Fed chief John Williams and Dallas Fed President Lorie Logan are also scheduled to deliver speeches later in the day. On economic front, confidence among large Japanese manufacturers rose in November, according to the Reuters Tankan survey, which measures business sentiment among large Japanese companies.

Meanwhile, oil tumbled to a three-month low as a forecast drop in US gasoline consumption added to a growing array of indicators suggesting the demand outlook is worsening. China, the world’s biggest importer, is also seeing dimming oil demand as winter approaches. South Korea’s Kospi fell 0.91% to 2,421.62, while the Kosdaq dropped 1.62% to 811.02. Japan’s Nikkei 225 also fell 0.33% to 32,166.48, and Topix lost 1.16% to 2,305.95. On the mainland, the Shanghai composite index fell 0.16% to 3,052.37, but Australia’s ASX 200 bucked the regional trend by gaining 0.26% to 6,995.40.

U.S. Stocks Subdued Ahead of Powell’s Remarks

U.S. stocks were little changed overnight as traders await Jerome Powell’s remarks to see whether he’ll dampen Wall Street’s dovish narrative. The Dow Jones Industrial Average lost 0.12% to close at 34,112.27. The S&P 500 inched up 0.10% to 4,382.78, while the Nasdaq Composite added 0.08% to 13,650.41. The choppy trading on Wall Street comes as words of caution from several hawkish members of the Fed have put a check on optimism that interest rates have peaked, sapping momentum from the rally in stocks. Market is keeping a close eye on Fedspeak, with traders awaiting Powell’s remarks on late Thursday during a panel on monetary policy challenges. Speaking briefly on Wednesday, the Fed chief didn’t comment on the outlook for interest rates.

Markets are pricing in an almost 50% chance of a rate cut of at least 25 basis points as soon as May, according to the CME Group's Fed Watch Tool, compared with about 41% a week earlier. Longer-dated yields fell and the 10-year Treasury yield was down on the day after a USD40 billion auction analysts viewed as acceptable given the increased size. Tech led gains among the 11 major S&P sectors, while energy and utilities were the weakest, with each losing more than 1%.

Source: TA Research - 9 Nov 2023