Hurt Retail Sentiment to Force Consolidation

Stocks fell for profit-taking correction on Tuesday as limit-down losses on selected lower liners due to forced selling activities damaged trading sentiment. The FBM KLCI shed 7.24 points to settle at 1,493.87, off an early high of 1,503.73 and low of 1,492.4, as losers trashed gainers 775 to 324 on higher turnover of 5.84bn shares worth RM3.59bn.

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

With retail sentiment dented by the heavy losses seen on selected lower liners, a profit-taking consolidation spell should follow, pending return of more stability and positive market news

flow. Immediate index support remains at 1,480, with better supports at 1,450/1,440 and 1,430. The immediate overhead resistance will be at 1,510, which restricted upside in Jan 2023, with next key hurdles seen at 1,520 and 1,550.

Bargain Dialog & DNEX

Further weakness on Dialog shares should attract bargain hunters looking for rebound upside towards the 100-day ma (RM2.07) and 200-day ma (RM2.13), with tougher hurdle from the 50%FR (RM2.25), while key chart supports are at RM1.84 and the 17/10/22 low (RM1.66). DNEX remains in base building mode, with crucial support from the 30/5/23 low (37sen) cushioning downside, while a breakout confirmation above the 200-day ma (45sen) should aim for 53sen and the 76.4%FR (59sen) going forward.

Asian Markets Tumble on Interest Rate Woes

Asian markets hit a one-month low Tuesday, after hawkish European Central Bank comments pushed back against bets on early and extensive rate cuts. The European Central Bank may defy market expectations and hold off on starting interest rate cuts during the whole of 2024, the institution’s Governing Council member Robert Holzmann told CNBC at the World Economic Forum in Davos, Switzerland. The sentiments echo prior comments from ECB President Christine Lagarde in warning that it’s too early to talk about trimming borrowing costs. Traders also cautiously await the first monetary policy decisions of the year from major global central banks.

On economic news, Australian consumer sentiment took a turn for the worse in January as higher mortgage rates stoked concerns over finances. Japan's wholesale inflation was flat in December from a year earlier, slowing for the 12th consecutive month, taking pressure off the Bank of Japan to raise rates. In Australia, the S&P/ASX 200 fell 1.09% to 7,414.80, while South Korea’s Kospi dropped 1.12% to 2,497.59. In Japan, the Nikkei 225 also fell 0.79% to 35,619.18, but the Shanghai composite index bucked the regional trend by gaining 0.27% to 2,893.99

Wall Street Dip as Rate Concern Lingers

Wall Street’s major indexes fell overnight as traders digest hawkish comments from top officials of a few central banks and awaited more economic data that could influence the Federal Reserve's data-driven policy thinking. The Dow Jones Industrial Average fell 0.62% to 37,361.12. The S&P lost 0.37% to 4,765.98, while the Nasdaq Composite fell 0.19% to 14,944.35. U.S. Federal Reserve Governor Christopher Waller echoed the sentiments of his European counterparts, saying that while U.S. inflation is approaching the central bank's 2% goal, the Fed should not rush to lower interest rates until lower inflation can clearly be sustained. Traders are also looking ahead to December retail sales data, which could fuel recessionary fears and concerns about economic growth if U.S. consumer spending sees a cooldown.

Meanwhile, the fourth-quarter earnings season has just burst through the starting gate, with 29 companies in the S&P 500 having reported as of Friday. Analysts currently see aggregate annual S&P earnings growth of 4.4% in the October-December period, down from 11% at the start of that period. Morgan Stanley shares dipped more than 4% after posting a quarterly profit impacted by a one-time charge of USD535 million. Goldman Sachs shares ended fractionally higher after the bank reported fourth quarter earnings jump of 51% year-overyear.

Source: TA Research - 17 Jan 2024