Profit-Taking Pause to Consolidate Gains

Blue chips eased into sideways trade on Tuesday, as profit-taking checked optimism over potential for interest rate cuts in the US sometime next year, while window-dressing support cushioned falls. The FBM KLCI ended almost flat at 1,465.67 (+0.39) after being stuck between narrow range of 1,464.65 low and high of 1,467.61, as gainers led losers 474 to 431 on lower turnover of 3.71bn shares worth RM2.41bn.

Need Break Above 1,470 to Aim for 1,490/1,500

The local market should fall into a near-term profit-taking consolidation, with uncertainty over the timeline for interest rate cuts next year stalling upside, while window-dressing interest cushion downside. The index will need breakout confirmation above the 1,465/1,470 immediate resistance area to fuel further upside towards the 1,490/1,500 next resistance area. Immediate support is at 1,450, with better chart supports at 1,430, and then 1,400/1,390.

Bargain Hartalega & Kossan

Profit-taking pullbacks on Hartalega will be attractive to bargain, with key chart supports at the mid-Bollinger band (RM2.50) and 61.8%FR (RM2.40), for recovery upside towards the June 2022 high (RM3.01), RM3.20 and 123.6%FP (RM3.38) ahead. Kossan Rubber should also see keen buying interest on dips nearer to the mid-Bollinger band (RM1.71) or 61.8%FR (RM1.64), while key resistance checking upside will be the April 2022 high (RM2.09) and 123.6%FP (RM2.36).

Japan’s Nikkei Led Asia Higher

Asian markets closed mostly higher Tuesday after the Bank of Japan maintained its ultra-dovish stance and offered no cues on a planned pivot. The Bank of Japan maintained ultra-loose monetary settings in a widely expected move, underscoring policymakers' preference to await more clues on whether wages will rise enough to keep inflation durably around its 2% target. The central bank also made no change to its dovish policy guidance that pledges to take additional monetary easing steps "without hesitation" if needed. Meanwhile, the RBA minutes revealed the Australian central bank deliberated on whether to raise rates by 25 basis points or leave them unchanged, with the board members eventually deciding to hold rates at 4.35%.

In China, weakness among developers continues to weigh on the country’s struggling economic recovery. Country Garden Services Holdings Co. hit a record low after it said it set aside some funds as impairment. The Nikkei 225 closed 1.41% higher at 33,219.39, while the Topix closed up 0.73% at 2,333.81. In Australia, the S&P/ASX 200 rose closed 0.84% at 7,489.10, and the Shanghai composite index closed flat at 2,932.39. South Korea’s Kospi inched higher by 0.07% to 2,568.55, while the small-cap Kosdaq gained 0.86% at 858.30.

Wall Street Extend Rally as Rate-Cut Fever Lingers

Wall Street extended its rally overnight, advancing on the day as last week's dovish policy pivot from the Federal Reserve continued to reverberate and investors looked ahead to crucial inflation data. Broad-based gains boosted all three major U.S. stock indexes and nudged the S&P 500 to within one percentage point of its all-time closing high reached in January 2022. The Dow Jones Industrial Average rose 251.90 points, or 0.68%, to 37,557.92. The Nasdaq Composite advanced 0.66% to 15,003.22. It was the first time the tech-heavy index closed above the 15,000 level since January 2022.The Nasdaq 100 gained 0.49% to 16,811.85, reaching all-time intraday and closing highs. Walgreens Boots Alliance was the best performer in the Dow, with shares up by 4.2%.

Meanwhile, solar stocks Enphase Energy and First Solar were among the biggest S&P 500 advancers, up by about 9% and 4%, respectively. Energy stocks outperformed, with the S&P 500 sector up by 1.2% as oil prices rose. Occidental Petroleum shares gained 2.3%, while Halliburton and Exxon Mobil shares were each higher by more than 1%. Equities have hit rally mode as of late, with last week’s indication of three likely interest rate cuts from the Federal Reserve in 2024 providing a catalyst for the market. Signs of cooling inflation and a pullback in Treasury yields have also helped risk assets during what’s already a typically strong season for equities.

Source: TA Research - 20 Dec 2023