Profit-Taking Pause to Rebuild Support

The local market fell for profit-taking correction on Wednesday, as overbought conditions and recent sharp gains encouraged investors to take profits on trading positions. The FBM KLCI lost 11.97 points to end near session lows at 1,486.86, off an opening high of 1,497.80, as losers beat gainers 588 to 359 on lower turnover of 4.97bn shares worth RM2.84bn.

Supports at 1,480/1,450; Resistance at 1,500/1,520

Stocks should extend profit-taking consolidation, which is key to rebuild support, consolidate gains and further neutralize overbought conditions. On the index, immediate resistance will be near the 1,500 level which capped upside in Jan 2023, with next hurdle at 1,520. Immediate chart supports are at 1,480, and 1,450, with better supports at 1,440 and 1,430.

Bargain Axiata & CelcomDigi

Axiata need convincing breakout above the 23.6%FR (RM2.58), matching the 200-day ma, to extend upside towards the 38.2%FR (RM2.82) and 50%FR (RM3.02) going forward, with downside cushioned by the lower Bollinger band (RM2.28). CelcomDigi will need breakout confirmation above the 123.6%FP (RM4.35) to enhance upside momentum and target the

138.2%FP (RM4.52) and 150%FP (RM4.65) ahead, while the lower Bollinger band (RM4.03) cushions downside.

Most Asian Markets Drop as Traders Await U.S. Data

Asian markets were mostly lower on Wednesday as investors traded cautiously ahead of U.S. inflation data due this week. Global traders are looking ahead this week to the release of the latest U.S. inflation data and big bank earnings for further clues on the state of the economy, and the path of rate cuts from the Federal Reserve. December’s consumer price index is due to be released Thursday, while the producer price index is due out on Friday. The CME's FedWatch Tool is showing a 65.8% chance for a cut of at least 25 basis points (bps) in March. Geopolitical tensions were also on the radar as disruptions in the Red Sea and a production outage in Libya raised oil prices, and an election looms in Taiwan.

South Korea’s Kospi slipped 0.75% to end at 2,541.98 as the country’s unemployment rate hit a 23-month high, while the Kosdaq tumbled 1.04% to 875.46. The S&P/ASX 200 fell 0.69% and closed at 7,468.50, after snapping its four-day losing streak on Tuesday, and the Shanghai composite index fell 0.54% to 2,877.70. However, Japan’s Nikkei 225 surged 2.01% and crossed the 34,000 mark for the first time since March 1990, closing at 34,441.72, while the Topix also saw gains, climbing 1.30% to close at 2,444.48.

Wall Street Edge Higher Ahead of Inflation Data, Earnings

Wall Street’s major indexes finished higher in choppy trading overnight, as traders waited for fresh inflation reports for possible clues on when the Federal Reserve could begin cutting interest rates and big bank earnings later in the week. The Dow Jones Industrial Average gained 0.45% to 37,695.67. The S&P added 0.57% to 4,783.45, while the Nasdaq Composite rose 0.75% to 14,969.65. All eyes are now on the December consumer and producer inflation reports, due on late Thursday and Friday, respectively, which could help determine the monetary policy trajectory for the central bank. Traders will also closely monitor comments by New York Fed President John Williams, who is scheduled to speak later in the day.

Also, in focus is the coming start of the fourth quarter earnings cycle, led Friday by Wall Street banking heavyweights such as JPMorgan Chase. The season will be critical for stocks, after their rough start to 2024. Intuitive Surgical and Lennar led the broader market higher, gaining more than 10% and 3%, respectively, while Microsoft, Amazon, Meta, and Nvidia were all up more than 1%.

Source: TA Research - 11 Jan 2024