Stocks to Mirror Global Market Strength

Blue chips rose on Thursday, led by the healthcare (+3.5%), oil & gas (+1.9%), utility (+1%) and technology heavyweights, as investors returned to bargain hunt on optimism over the US Federal Reserve’s end of its rate hike cycle and pivot to rate cuts next year. The FBM KLCI climbed 8.22 points to close at the day’s high of 1,456.26, off an early low of 1,448.14, as gainers led losers 566 to 353 on active trade totalling 4.24bn shares worth RM2.78bn.

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

Stocks should mirror the strength in global markets as investors begin to price in recovery following the outlook for a soft landing for the US economy and the US central bank’s pivot to rate cuts next year. 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 Aemulus & DNEX

Aemulus will need breakout confirmation above the 200-day ma (33sen) to boost upside momentum towards the 76.4%FR (39sen) and 61.8%FR (45sen) going forward, while crucial support will be from the 1/12/23 pivot low (23sen). DNEX is attractive to bargain at current levels above crucial support from the 30/5/23 low (37sen), for rebound upside to the 100-day ma (43sen) and 200-day ma (47sen), with tougher hurdles seen at 53sen and the 76.4%FR (59sen).

Asian Markets Mixed as Fed Rate Decision Looms

Asian markets ended mostly mixed Thursday, with investors digesting the U.S. Federal Reserve’s move to end its interest-rate-hiking cycle and signal cuts for the next year. Optimism earlier in the session spilled over from Wall Street, which rallied as the Fed held rates at 5.25%-5.5% for a third straight time and laid out the timeline for at least three quarterpercentage point cuts in 2024 and beyond. Forecasts for the core personal consumption expenditures price index — the Fed’s favoured inflation gauge— have also been pared back by the Fed to 2.4% in 2024 and 2.2% in 2025, down from 2.6% and 2.3% respectively in its previous forecasts.

In Australia, the S&P/ASX 200 was up 1.65%, hitting levels not seen since Aug. 1 and closing at 7,377.9. Japan’s Nikkei 225 closed 0.73% lower at 32,686.25, while the Topix slipped 1.43% to close at 2,321.35. The financial sector led declines in the region as investors in Japan awaited the Bank of Japan’s policy decision next week. South Korea’s Kospi was an outlier on the day, popping 1.34% to close at 2,544.18, while the small-cap Kosdaq added 1.36% to end at 840.59. Hong Kong’s Hang Seng index rose 1.1%, while China’s CSI 300 index ended 0.52% lower at 3,351.96.

Wall Street Ends Slightly Higher as Traders Cheer Fed Outlook

Wall Street's main indexes closed slightly higher overnight as traders cheer Fed’s dovish pivot and received fresh economic data that helped fuel hopes for a soft landing. The Dow Jones Industrial Average rose 0.43% to 37,248.35. The S&P gained 0.26% to 4,719.55, while the Nasdaq Composite added 0.19% to 14,761.56. Stocks continue to benefit from a positive reaction to the Federal Reserve's monetary policy announcement on Wednesday. The Fed left interest rates unchanged, as widely expected, and signaled plans to cut interest rates three times next year. Adding to optimism the economy is headed toward a soft landing, the Commerce Department released a report this morning showing an unexpected increase in U.S. retail sales in November.

The 10-year Treasury note yield dropped below 4% for the first time since August as traders mounted bets on rate cuts for 2024. In a busy day for central banks, the European Central Bank also held interest rates steady but pushed back against the notion of rate cuts. The Bank of England echoed the ECB, insisting interest rates would be elevated for an extended time. Elsewhere, the Swiss National Bank held rates firm but lowered inflation forecasts, while Norway's central bank surprised with a rate hike.

Source: TA Research - 15 Dec 2023