Further Rebound May Stall on US Fiscal Showdown

Bursa Malaysia shares ended higher on Tuesday as investors returned from the extended weekend Deepavali festival break to bargain hunt, but caution prevailed ahead of the release of U.S. inflation data. The FBM KLCI rose 6.54 points to close at 1,451.72, off an opening low of 1,444.90 and high of 1,453.99, as gainers narrowly edged losers 489 to 481 on a total turnover of 3.08bn shares worth RM1.77bn.

Resistance at 1,465/1,470; Support at 1,430/1,400

The local market should extend a rebound following the overnight U.S. rally sparked by cooling inflation numbers for October, but gains could be checked by caution over the fiscal talks deadline to prevent another U.S. government shutdown by the end of the week. Immediate index resistance will be at 1,465/1,470, with the 1,490/1,500 area acting as a tougher upside hurdle. Immediate support remains at 1,430, then 1,400/1,390, with the end of June low of 1,370 acting as crucial support.

Bargain Bumi Armada & Hibiscus

Bumi Armada shares are base building at current levels pending renewed strength to overcome the 200-day ma (57sen) and aim for the 76.4%FR (63sen), with a tougher upside hurdle at the 7/3/23 peak (73sen) and stronger support at the 38.2%FR (47sen). Hibiscus need to climb above the 50%FR (RM2.76) to enhance upside potential towards the 61.8%FR (RM2.96) and 76.4%FR (RM3.22) going forward, while the 200-day ma (RM2.50) cushions downside.

Asian Markets Higher Ahead of US Inflation Data

Asian markets edged higher on Tuesday as markets awaited U.S. inflation figures that are forecasted to cement the notion that interest rates are peaking. A batch of economic reports this week, including U.S. inflation data, will help shape the direction of markets after a rally driven by bets that the end of the rate-hike cycle is approaching. Traders are also keeping a close eye on Washington negotiations to avert a U.S. government shutdown at the end of this week, an event that would threaten the loss of the nation's last top credit rating after Moody's Investors Service signalled Friday it was inclined to issue a downgrade amid broader budget deficits and political polarisation.

On economic data, Australia’s consumer confidence slid in November, according to a Westpac-Melbourne Institute survey. The Westpac-Melbourne Institute index of consumer sentiment fell to 79.9 in November, down from 82 in October. South Korea’s Kospi rose

1.23% to 2,433.25, while the Kosdaq jumped 2.55% to 794.20. Japan’s Nikkei 225 gained 0.34% to 32,695.93, and the Topix added 0.37% to 2,345.29. In Australia, the S&P/ASX 200 ended 0.83% higher at 7,006.70, while the Shanghai Composite Index added 0.31% to 3,056.07.

Wall Street Rally on Benign Inflation Data

Wall Street's main indexes finished sharply higher overnight as cooler-than-expected inflation print supported the view that the Federal Reserve may be done raising interest rates. The Dow Jones Industrial Average rose 1.43% to 34,827.70. The S&P 500 gained 1.91% to finish the session at 4,495.70, while the Nasdaq Composite jumped 2.37% to 14,094.38. The rally comes following the release of the Labor Department's highly anticipated report on consumer price inflation in October. Data showed U.S. consumer prices were unchanged in October as Americans paid less for gasoline, and the annual rise in underlying inflation was the smallest in two years. The fresh figures are reassuring investors that the Federal Reserve is likely done raising interest rates, a view that has helped send major indexes sharply higher since the central bank's last meeting.

Meanwhile, the 10-year Treasury yield, which shocked stock investors by leaping over 5% in October, tumbled below 4.5% following the soft inflation report. Elsewhere, eyes are watching for signs of warming relations between the U.S. and China at the APEC summit in San Francisco, where President Joe Biden and his Chinese counterpart Xi Jinping are set to meet face-to-face this week. They are expected to announce an agreement for China to crack down on the manufacture and export of fentanyl, Bloomberg reported.

Source: TA Research - 15 Nov 2023