Overnight US Rally to Cushion Local Market

Bursa Malaysia shares extended sideway trading Wednesday, as sentiment on the local front remain negative amid lack of positive catalysts, and in lined with regional weakness as investors remained cautious ahead of the last Federal Reserve decision of the year. The KLCI rose 0.92 points to end at 1,448.04, after oscillating between high of 1,448.48 and low of 1443.72, as gainers led losers 482 to 373 on total turnover of 3.76bn shares worth RM2.4bn.

Resistance at 1,465/1,470; Better Supports at 1,430/1,400

The overnight rally on Wall Street should revive the local market today, but undertone remains cautious as investors refrain from trading commitments amid clueless market direction on the local front. On the index, immediate resistance remains at 1,465/1,470, with the 1,490/1,500 area acting as tougher upside hurdle. Better chart supports are at 1,430, and then 1,400/1,390, while the end June low of 1,370 will act as crucial support.

Bargain Public Bank & Sime Darby

Public Bank need to sustain above the 76.4%FR (RM4.29) to enhance upside momentum towards the 4/4/22 high (RM4.51), with a confirmed breakout to aim for the 123.6%FP (RM4.72) ahead, while the 100-day ma (RM4.14) cushions downside. Sime Darby will need decisive breakout above the 138.2%FP (RM2.46) to target the 150%FP (RM2.52) and 161.8%FP (RM2.57) going forward, while the rising 50-day ma (RM2.33) provides uptrend support.

Asian Markets Mixed as Fed Rate Decision Looms

Stocks in Asia were mixed on Wednesday as traders reluctant to make significant moves ahead of the US Fed's final monetary policy announcement this year later in the day. The Fed takes center stage on late Wednesday, where it is due to announce its rate decision at the conclusion of its two-day policy meeting. Market expectations are for policymakers to keep rates on hold, but the latest economic figures bring into question the aggressive pricing of a dovish pivot. The data also spurred speculation that Chairman Jerome Powell will try to throw cold water on the Fed-easing buoyancy. That leaves focus on Powell's press conference and the Fed's dot plot of future policy trajectory.

Nonetheless, investors continue to bet that the Fed is all but certain to begin easing monetary policy in 2024, and are pricing in a 75% chance the first cut could come as early as May, according to the CME Fed-Watch tool. In Australia, the S&P/ASX 200 climbed 0.31% and closed at 7,257.80, extending its four-month highs. Japan’s Nikkei 225 advanced 0.25% to close at 32,926.35, while the Topix was unchanged at 2,354.92. In contrast, South Korea’s Kospi fell 0.97% to close at 2,510.66 and the Shanghai composite index dropped 1.15% to 2,968.76.

Wall Street Rallies On Fed’s Dovish Statements

Wall Street's three main stock indexes ripped higher overnight after the Federal Reserve flagged the end of its tightening cycle and struck a dovish tone for the year ahead. The Dow Jones Industrial Average rose 1.40% to 37,090.24. The S&P 500 jumped 1.37% to finish the session at 4,707.09, while the Nasdaq Composite climbed 1.38% to 14,733.96. The surge on Wall Street came after the Fed announced its widely expected decision to leave interest rates unchanged while also confirming plans to pivot to cutting rates next year. In support of its dual goals of maximum employment and inflation at the rate of 2% over the longer run, the Fed said it decided to maintain the target range for the federal funds rate at 5.25% to 5.50%.

The accompanying statement said the decision came as economic growth has slowed from its strong pace in the third quarter, while inflation has eased over the past year. The projections provided by the Fed also suggest the central bank will begin cutting rates next year, with the median forecast indicating rates will be lowered to 4.6% by the end of 2024. The 10-year Treasury yield, a benchmark for mortgage rates and other loans, dropped to 4.03% following the Fed’s rate forecast release, the lowest levels since August.

Source: TA Research - 14 Dec 2023