Range Bound to Ease Overbought Momentum

Stocks extended profit-taking consolidation on Thursday, as market players continued to take profits and consolidate trading positions. The FBM KLCI slid 3.86 points to close at the day’s low of 1,483.00, off an early high of 1,492.44, as losers beat gainers 568 to 406 on lower trade totalling 4.64bn shares worth RM3bn.

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

The local market should stay range bound and attempt to rebuild support at current levels and further ease overbought momentum, while eyeing the upcoming US December consumer and producer inflation reports for leads. 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 AMBank & CIMB

AMBank will need to overcome the 123.6%FP (RM4.30) to sustain upside momentum towards the 138.2%FP (RM4.46) and 150%FP (RM4.60) ahead, with uptrend support from the rising 50-day ma (RM3.97) cushioning downside. CIMB needs successful breakout above the 138.2%FP (RM6.09) to extend uptrend and aim for the 150%FP (RM6.25) and 161.8%FP (RM6.40) going forward, while downside is similarly cushioned by the 50-day ma (RM5.80).

Asian Markets Advance Ahead of U.S. Inflation Data

Asian markets rose on Thursday as traders looked ahead to a U.S. consumer price report that will help clarify the path ahead for Federal Reserve policy. Market attention has zeroed in on the U.S. consumer price index report due later on Thursday. Core CPI is forecast to remain unchanged at 0.3% from the month before, while year-on-year inflation is expected to slow to 3.8% from November's 4%, a Reuter’s poll showed. Traders are also anxious to see U.S. company quarterly results, which begin with reports from some of the big U.S. banks on late Friday. On economic news, the Bank of Korea left its main lending rate unchanged at 3.50% for the eighth time in a row, in line with expectations of economists polled by Reuters.

Separately, Australia posted a merchandise trade surplus of AUD11.437 billion in November, the Australian Bureau of Statistics said on Thursday. Japan’s benchmark Nikkei 225 jumped 1.77% to 35,049.86, and the Topix rose 1.57% to 2,482.87. In Australia, the S&P/ASX 200 rose 0.50% to close at 7,506.00, rebounding from Wednesday’s losses, and the Shanghai composite index added 0.31% to 2,886.65. South Korea’s Kospi closed flat at 2,540.27, while the small cap Kosdaq rose 0.81% to 882.53.

Wall Street Subdued as Traders Assess Inflation Data

Wall Street’s major indexes ended the session almost unchanged after a fresh reading on December inflation came in slightly hotter than economists had expected, raising new questions about the Federal Reserve's path on interest rates. The Dow Jones Industrial Average inched higher by 0.04% to 37,711.02. The S&P edged lower by 0.07% to 4,780.24, while the Nasdaq Composite ended flat at 14,970.18. The weakness on Wall Street came as traders digested the Labor Department's highly anticipated report on consumer price inflation in December, which showed prices rose by slightly more than expected. A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly edged slightly lower in the week ended 6th January. Fed Bank of Cleveland President Loretta Mester said March is probably too early to lower rates.

Her Richmond counterpart Thomas Barkin reiterated he’s still looking for more evidence that inflation is headed toward the target. Nearly all of the S&P 500's 11 major sectors declined, with only energy and technology in positive territory. Citigroup fell 2% after a filing showed the lender booked about USD3.8 billion in combined charges and reserves that will erode its fourth-quarter earnings, due to be reported on late Friday. Other banks like JPMorgan Chase lost 0.7%, Bank of America fell 1.7% and Wells Fargo shed 1.6% ahead of their earnings reports.

Source: TA Research - 12 Jan 2024