Banks and Telcos to Gain on Window-Dressing

Stocks recovered on mild bargain hunting Wednesday, as more investors returned to nibble with most markets in the region resuming trade after the long Christmas and Boxing Day holiday break. The FBM KLCI gained 3.44 points to close at 1,454.22, after moving between early low of 1,452.08 and high of 1,455.44, as gainers led losers 468 to 380 on improving turnover of 3.29bn shares worth RM2.06bn.

Support at 1,450/1,430; Resistance at 1,470/1,500

While the broader market may stay range bound, heavyweight blue chips, especially the banks and telcos, should highlight gains as window-dressing picks up momentum ahead of the yearend. On the index, it will need to hold above the 1,450 immediate support level to prevent further dip towards better supports at 1,440 and 1,430, while 1,400/1,390 should act as

stronger support. A convincing breakout above 1,470 will encourage further gain towards the 1,490/1,500 level, where it may end the year as window-dressing activity returns.

Bargain AMBank & CIMB

AMBank will need sustained strength above the upper Bollinger band (RM4.08) to promote further uptrend towards the 123.6%FP (RM4.30) and 138.2%FP (RM4.46) ahead, while uptrend support from the 100-day ma (RM3.79) cushion downside. CIMB needs a convincing breakout above its 19/12/23 peak (RM5.99) to enhance upside momentum and aim for the 138.2%FP (RM6.09) and 150%FP (RM6.24) going forward, with the 100-day ma (RM5.62) providing uptrend support.

China, Hong Kong Climb on Video-Game Shares Surge

China and Hong Kong stocks gained ground Wednesday as video-game shares surged, while Australia stocks hit a near two-year high, as more markets resumed trading after a Christmas break. China’s CSI 300 index ended 0.35% higher at 3,336.36, helped by shares of video-game companies that rebounded after declining in the previous session. Chinese online gaming stocks rose in Hong Kong trading after Beijing’s top gaming regulator said it would “carefully study” the concerns of all stakeholders on draft rules aimed at curbing excessive gaming and spending. Hong Kong’s Hang Seng index rose close to 2%. This is the first trading day of the week for Hong Kong markets.

Australia’s S&P/ASX 200 index ended 0.79% higher at 7,561.20. The index hit its highest level since late April 2022, as trading resumed for the week. It is eying yearly gains of over 7%. Aussie stocks have been buoyed by hopes that the Reserve Bank of Australia will no longer be hiking interest rates after the central bank held rates steady at its last meeting of the year, partly driven by the Federal Reserve’s more dovish tilt. With fewer data points on the economic calendar and all major central bank meetings out of the way, trading volumes are expected to be thin. Japan’s Nikkei 225 rose 1.13% at 33,681.24, while South Korea’s Kospi ended 0.42% higher at 2,613.50.

Wall Street Near Record Highs on Rate Cut Hopes

US stocks finished higher overnight as traders kept an eye on the S&P 500′s march toward record levels. The S&P 500 inched up 0.14% to end at 4,781.58, while the Nasdaq Composite added 0.16% to close at 15,099.18. The Dow Jones Industrial Average rose 111.19 points, or 0.3%, to finish at 37,656.52. The Dow notched a fresh closing high, while the S&P 500 finished less than 0.5% off its closing record of 4,796.56 set in January 2022. Along with the Dow and Nasdaq, the S&P is also enjoying an eight-week winning streak — its longest since 2017.

Stocks are in the thick of what is referred to as the “Santa Claus rally,” a period comprised of the last five trading days of an ending year and first two of a new one. Despite the upbeat sentiment, some on Wall Street worry that the market may be overly optimistic, which could lead to disappointment if the Federal Reserve starts cutting rates later than expected. Fed funds futures pricing reflects a significant probability of rate cuts as early as next March. 90% of stocks in the S&P 500 are trading above their 50-day moving averages, suggesting a bit of frothiness in the market. Recent bullish sentiment data showing overexcitement could also put investors at risk of getting “sideswiped” by unanticipated events.

Source: TA Research - 28 Dec 2023