Rebound May Stall on US Govt Shutdown Caution

Blue chips rose on Wednesday, lifting the benchmark index up to a fresh nine-month high, on spreading optimism the US rate-hike campaign has ended following the soft October inflation data. The FBM KLCI climbed 15.12 points to end at the day’s high of 1,466.84, off an opening low of 1,453.07, as gainers led losers 595 to 359 on robust trade totalling 3.94bn shares worth RM2.21bn.

Resistance at 1,465/1,470; Support at 1,450/1,430

While stocks should extend rebound following recent optimism that the US central bank may end and even reverse rate-hikes next year, further upside could stall on caution over a deadline to prevent another US government shutdown by end of this week. Immediate index resistance remains at 1,465/1,470, with the 1,490/1,500 area acting as tougher upside hurdle. Immediate support is raised to 1,450, with stronger supports at 1,430, then 1,400/1,390, and the end June low of 1,370 as crucial support.

Bargain AMBank & CIMB

AMBank will need breakout confirmation above the 14/12/22 peak (RM4.09) to enhance upside momentum towards the 123.6%FP (RM4.36) and 138.2%FP (RM4.53) ahead, with the 100-day moving average (RM3.75) cushioning downside. CIMB need to climb above the

123.6%FP (RM5.89) to aim for the 138.2%FP (RM6.09) and 150%FP (RM6.24) going forward, while downside is seen cushioned by the 50-day moving average (RM5.60).

Asian Markets Finish Higher as Inflation Fears Abate

Stock markets in Asia traded higher on Wednesday, as steady U.S. inflation figures boosted investor confidence that the Federal Reserve was done hiking interest rates and may start cutting early next year. The U.S. consumer prices were unchanged from the prior month in October as a drop in oil prices dragged down headline inflation while "core" inflation rose at the slowest annual pace since September 2021, according to the latest data from the Bureau of Labor Statistics. The deceleration signaled to both investors and Wall Street economists that the Federal Reserve could very likely be done raising interest rates. U.S. retail sales data are the next focus for markets, although analysts think that even a positive number is unlikely to dampen the euphoria over the prospective end of the rate hike cycle.

On economic front, data showed Japan’s economy shrank during the third quarter for the first time in four quarters, amid slowing global demand and rising domestic inflation. On the other side of the world, China's central bank boosted liquidity injections on Wednesday, although it kept the interest rate unchanged when rolling over maturing medium-term policy loans. South Korea’s Kospi rose 2.20% to 2,486.67, while the Kosdaq gained 1.91% to 809.36. Japan’s Nikkei 225 also rose 2.52% to 33,519.70, and the Topix added 1.19% to 2,373.22. In Australia, the S&P/ASX 200 ended 1.42% higher at 7,105.90, while the Shanghai composite index gained 0.55% to 3,072.83.

Source: TA Research - 16 Nov 2023