Profit-Taking Consolidation to Extend

Blue chips fell for profit-taking correction on Thursday, tracking overnight US and regional markets lower, as lacking window-dressing action discouraged bargain hunting. The FBM KLCI shed 8.98 points to close at 1,455.58, off an opening high of 1,463.17 and low of 1,454.97, as losers beat gainers 435 to 390 on lower turnover of 3.06bn shares worth RM2.09bn.

Supports at 1,450/1,430; Resistance at 1,470/1,490/1,500

The local market should extend profit-taking consolidation ahead of the weekend, given the weak buying momentum and as investors await key US economic GDP data and inflation readings for leads. Immediate index resistance remains at 1,470, with the 1,490/1,500 level as next resistance area, while immediate support is at 1,450, with better supports at 1,430, and then 1,400/1,390.

Bargain Globetronics & Unisem

Globetronics will be attractive to bargain on further dips, with key retracement support at the 50%FR (RM1.50) cushioning downside, for rebound upside towards resistance from the 76.4%FR (RM1.79), RM1.92 and the 27/9/21 high (RM2.04) going forward. Unisem need convincing breakout above the 61.8%FR (RM3.40) to enhance upside momentum towards the 76.4%FR (RM3.74) and 22/11/21 high (RM4.28) ahead, while the 200-day moving average (RM3.11) limits downside risk.

Japan Stocks Extend Rise on Dovish BoJ

Asian shares retreated Thursday after Wall Street snapped a long winning streak, while Treasury yields dipped to near five-month lows on hopes Britain's notably soft inflation reading would be echoed in looming U.S. price data. Economists polled by Reuters expect the U.S. economy to post a 5.2% year-on-year growth in the third quarter, while the Personal Consumption Expenditures price index is expected to climb 2.3% in the same period — its slowest rise since the fourth quarter of 2020.

China's blue-chip CSI300 index rose 1.25%, rebounding from a near five-year low hit in the previous session. Foreign investors have been net buyers of Chinese shares so far, following two sessions of selling. Hong Kong shares tracked global markets lower in morning trade but the benchmark Hang Seng Index reversed earlier losses to end flat. In Australia, the S&P/ASX 200 was down 0.45%, closing at 7,504.1. Japan’s Nikkei 225 plunged 1.59% to end at 33,140.47 after nearly reaching a 33-year high on Wednesday, while the Topix fell 1% to close at 2,325.98. Both the indexes were dragged lower by safety scandals at automaker Toyota. South Korea’s Kospi also dropped 0.55% to finish at 2,600.02.

Wall Street Rebound Led by Chip Stocks

U.S. stocks closed higher overnight, winning back much of the previous day's losses, as economic data fueled optimism that the Federal Reserve would ease monetary policy and revive investor risk appetite. The Dow Jones Industrial Average gained 322.35 points, or 0.87%, to 37,404.35, the Nasdaq Composite advanced 1.26% to 14,963.87 and the S&P 500 added 1.03% to 4,746.75. That places the broad market index about 1% from its closing high and 1.5% from its intraday record. The S&P 500 advance was broad-based with more than 450 names rising in the index. Micron Technology was the best performer, jumping 8.6% after the memory chipmaker topped quarterly expectations, and offered current-quarter guidance that exceeded forecasts. Chip stocks rose broadly, with Intel and Advanced Micro Devices rising 2.9% and 3.3%, respectively. Salesforce was among the leading advancers in the Dow, rising 2.7% following an upgrade from Morgan Stanley.

Data on Thursday showed third-quarter U.S. economic growth was not as robust as originally stated, and cracks are appearing in the tight labour market, which the Fed considers an obstacle to cooling inflation. The gross domestic product increased at a 4.9% annualized rate last quarter, revised down from the previously reported 5.2% pace. Financial markets are pricing in a 71.3% likelihood that the U.S. central bank will reduce the Fed funds target rate by 25 basis points as soon as March, according to CME's FedWatch tool. The market is awaiting the Commerce Department's personal consumption expenditures (PCE) report due on Friday, which will cover income growth, consumer spending and inflation. All 11 major sectors of the S&P 500 ended in positive territory, and consumer discretionary stocks enjoyed the biggest percentage gains.

Source: TA Research - 22 Dec 2023