Profit-Taking Consolidation Key to Sustain Uptrend

The local blue-chip benchmark climbed above the 1,500 level to close at a 14-month high on Monday, lifted by keen bargain hunting interest in the property (+2.6%), telco (+1.4%), plantation (+1.2%) and construction (+1.2%) sectors. The FBM KLCI surged 13.77 points to end near session highs at 1,501.11, off an early low of 1,487.81, as gainers led losers 575 to 456 on total turnover of 4.98bn shares worth RM3.13bn.

Resistance at 1,510/1,520; Support at 1,480/1,450

A profit-taking consolidation at current levels will be preferred to consolidate recent strong gains and promote a more sustainable uptrend ahead. The immediate overhead index resistance will be at 1,510, which restricted upside in Jan 2023, with next key hurdles seen at

1,520 and 1,550. Immediate chart support is still at 1,480, with better supports at 1,450/1,440 and 1,430.

Bargain Gadang & Gamuda

Gadang shares will need sustained strength above the 76.4%FR (40sen) to fuel further upside momentum and challenge the 15/4/22 high (44sen), with next hurdle at the 123.6%FP (48sen), and solid support from the 100-day ma (33sen) cushioning downside. Gamuda need to overcome the 123.6%FP (RM5.16) to aim for the 138.2%FP (RM5.40) and 150%FP (RM5.59) ahead, with the 100-day ma (RM4.55) providing strong uptrend support.

Asian Markets Mixed on China Worries

Asian markets ended mixed on Monday, as China's central bank wrong footed markets by skipping on a rate cut, even as data due this week is expected to show the economic recovery there remains fragile. The People’s Bank of China maintained the rate on its one-year policy loans and called the medium-term lending facility at 2.5%, contrary to widespread expectations among economists that it would cut it by 10 basis points. Traders will be closely watching China’s fourth-quarter gross domestic numbers due on Wednesday, and traders have become used to being underwhelmed by activity as Beijing drip feeds its stimulus.

A holiday in the United States also made for thin trading, but at least there was progress on averting an imminent government shutdown as congressional leaders agreed on another stopgap spending bill. In Australia, the S&P/ASX 200 fell marginally, ending at 7,496.30, while South Korea’s Kospi inched up by 0.04% to 2,525.99. In Japan, the Nikkei 225 rose 0.91% to 35,901.79, and the Shanghai composite index added 0.15% to 2,886.29.

Europe Ends Lower on Interest Rate Concern

Major European markets closed lower overnight after European Central Bank officials poured cold water on expectations for rapid rate cuts even as data from Germany underscored the challenging backdrop for economic growth. The pan European Stoxx 600 lost 0.54%. The U.K.'s FTSE 100 ended lower by 0.39% to 7,594.91, Germany's DAX fell 0.49% to 16,622.22 and France's CAC 40 lost 0.72% to 7,411.68. U.S. markets were closed for Martin Luther King, Jr. Day. Lingering inflation and geopolitical risks will prevent the ECB from lowering interest rates this year, even though a recession can no longer be ruled out, according to Governing Council member Robert Holzmann. He joined colleagues including ECB President Christine Lagarde and Chief Economist Philip Lane in warning that it’s too early to talk about trimming borrowing costs.

On economic front, Germany reported a contraction of 0.3% in the fourth quarter and a decline in output of the same magnitude for the whole of 2023. Even so, Bundesbank President Joachim Nagel agreed that it’s premature to discuss monetary easing, suggesting no movement before the summer. Separately, data from Eurostat showed Eurozone industrial production declined for the third straight month in November, falling 0.3% in the month. Oil prices also slipped after Houthi forces in Yemen struck the U.S.-owned and operated dry bulk ship Gibraltar Eagle with an anti-ship ballistic missile.

Source: TA Research - 16 Jan 2024