Property and Rubber Glove Stocks on Momentum Play

Small-caps surged on Wednesday as investors returned to bargain-hunt, with the property (+3.9%), healthcare (+3.4%) and utility (+3%) sectors leading gains, ignoring falls on regional markets led by tech stocks. The FBM KLCI climbed 9.27 points to close at 1,462.37, off an early low of 1,450.17 and high of 1,465.69, as gainers swarmed losers 715 to 352 on strong turnover totalling 5.63bn shares worth RM3.12bn.

Resistance at 1,470/1,500; Supports at 1,450/1,440

The local market should extend gains with investors returning to bargain-hunt, with focus on property and rubber glove stocks on momentum play. The index will need to convincingly climb above immediate resistance at 1,470 to aid further upside towards the 1,490/1,500 level, with next hurdle seen at 1,520. Immediate support remains at 1,450, with better supports at 1,440 and 1,430.

Bargain Supermax & Top Glove

Supermax will need to overcome immediate overhead resistance from RM1.03 and RM1.10 to fuel further upside momentum towards RM1.20 and RM1.30 ahead, with downside cushioned by the 200-day ma (86sen) and 100-day ma (85sen). Top Glove need breakout confirmation above the upper Bollinger band (RM1.00) to enhance upside potential towards RM1.10, RM1.25 and RM1.40 going forward, while the 200-day ma (89sen) and 100-day ma (81sen) cushions downside risk.

Asian Markets Dip on Tech Declines

Asian markets extended a global sell-off on Wednesday, as major tech firms including chipmakers came under pressure after Barclays downgraded Apple. Technology stocks are bearing the brunt after Barclays cut the iPhone maker Apple's rating to underweight and trimmed its price target. Apple suppliers in major Asia markets fell, weighing down indexes in Taiwan and South Korea. Stocks were also pressured by a climb in Treasury yields in the New Year. The 10-year U.S. Treasury yield briefly popped above 4% overnight, the first time in two weeks, but closed at 3.9406%, up 8 basis points for the day. Most technology and chip stocks including Samsung Electronics, LG Corporation and SK Hynix fell about 3% each.

Traders now look ahead to a busy week of economic data, including key US jobs data and the latest US Fed monetary policy meeting minutes, for important clues to the economic and interest rate outlook. South Korea’s Kospi closed 2.34% lower at 2,607.31, while the smallcap Kosdaq fell 0.84% to end at 871.57. In Australia, the S&P/ASX 200 retreated 1.37% after hitting an all-time high on Tuesday, closing at 7,523.20. In China, the Shanghai composite index bucked the regional trend by gaining 0.17% to 2,967.25, while Japan’s markets are closed until Thursday.

Wall Street Slips as Traders Digest Fed Minutes

Wall Street major Indexes fell overnight as investors digested minutes from the U.S. Federal Reserve's latest meeting and braced for significant economic data in the days to come. The Dow Jones Industrial Average fell 0.76% to 37,430.19. The S&P lost 0.80% to 4,704.81, while the Nasdaq Composite dropped 1.18% to 14,592.21. Federal Reserve officials in December concluded that interest rate cuts are likely in 2024, though they appeared to provide little in the way of when that might occur, according to minutes from the meeting released overnight. At the meeting, the rate-setting Federal Open Market Committee agreed to hold its benchmark rate steady in a range between 5.25% and 5.5%.

This pullback also came as the U.S. 10-year Treasury yield briefly rose above the key 4% mark. It was last trading around 3.91%. On the U.S. economic front, a report released by the Institute for Supply Management showed U.S. manufacturing activity contracted at a slightly slower rate in the month of December. The Labor Department also released a report showing job openings in the U.S. edged down from an upwardly revised level in the month of November. Apple shares dipped another 0.8%, while other tech stalwarts Nvidia, Tesla and Meta all declined overnight.

Source: TA Research - 4 Jan 2024