Window-Dressing Likely to Lift Banks and Telcos

Blue chips were traded moderately higher on Thursday, supported by mild window-dressing interest as the broader market staged consolidation. The FBM KLCI added 3.19 points to close at 1,457.41, off an opening low of 1,453.06 and high of 1,459.1, as gainers led losers 486 to 404 on robust trade totalling 4.23bn shares worth RM2.39bn.

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

While the broader market should extend range bound trade, heavyweight blue chips, especially banks and telcos, should highlight with window-dressing seen to pick up momentum on the last trading day of the year. On the index, it will need to hold above the 1,450 immediate support level to prevent further dip toward 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 windowdressing activity returns.

Bargain Maybank & RHB Bank

Maybank needs to overcome the 138.2%FP (RM9.12) to fuel further upside momentum and aim for the 150%FP (RM9.32) and 161.8%FP (RM9.51) going forward, while the 200-day ma (RM8.65) provide key uptrend support. On RHBBank, the share price needs to rebound above

the 100-day ma (RM5.53) to enhance upside potential towards the 123.6%FP (RM5.75) and 138.2%FP (RM5.90) ahead, with key retracement support from the 76.4%FR (RM5.27).

China, Hong Kong Markets Led Gains in Asia

China and Hong Kong markets led a rally in Asia stocks on Thursday, while Australian shares closed near two-year highs. China's CSI 300 index jumped 2.34% to close at 3,414.54, extending gains to the second day. Hong Kong's Hang Seng index climbed 2.5%, also rising for the second day. Hong Kong is still the worst-performing large Asia-Pacific market in 2023, down by some 14%. Markets including Australia and Hong Kong resumed trading Wednesday after a Christmas break, both ending higher, while a rebound in online gaming stocks buoyed China stocks.

Australia’s S&P/ASX 200 index closed 0.70% higher at 7,614.30, at its highest level since late April 2022. The index is set to end the year higher at 7.7%. Japan’s Nikkei 225 ended down 0.42% at 33,539.62, after closing more than 1% higher in the previous session. The broader Topix index closed down 0.14% at 2,362.02, cooling off after four straight sessions of gains. Retail sales data from Japan showed a 5.3% growth in November, higher than a Reuters poll forecast of 5%. South Korea’s Kospi was 1.60% higher closing at 2,655.28, building on gains from the previous session.

Wall Street Held Ground on Rate Cut Hope Next Year

US stocks ended slightly higher overnight on hopes for the Federal Reserve’s imminent pivot move toward interest rate cuts from next year. The Dow Jones Industrial Average rose 0.14%, while the Nasdaq Composite and the S&P 500 were little changed. Investors have ramped up bets on rapid-fire rate cuts next year from the Federal Reserve. The rapid decline in inflation is likely to lead the Fed to cut early and fast to reset the policy rate from a level that will likely be seen as far offside, according to Goldman Sachs, which expects three consecutive 25-bp cuts in March, May, and June, followed by one cut per quarter until the funds rate reaches 3.25-3.5% in 2025 Q3. Their forecast implies 5 cuts in 2024 and 3 more cuts in 2025. The number of Americans filing initial claims for unemployment benefits rose last week, according to data released on Thursday, indicating the labour market continues to cool in the year's fourth quarter.

With just one trading day left in 2023, all major averages are on pace to wrap up the year with gains. The blue-chip Dow and the S&P are poised to finish higher by nearly 13.8% and 24.6%, respectively. Meanwhile, the technology-heavy Nasdaq is on track for its best year since 2003, climbing 44.2%. That outperformance has been driven by the artificial intelligence craze and a rebound among mega-cap tech names after 2022′s carnage. The three major indexes are also slated to notch their ninth straight winning weeks. That underscores the market’s late 2023 rally, rebounding off a negative third quarter. The S&P is up 11.6% for the quarter and headed for its best quarterly performance in three years. Stocks are now in the middle of a period dubbed the “Santa Claus rally,” which refers to the last five trading days of an ending year and the first two of a new one.

Source: TA Research - 29 Dec 2023