External Headwinds to Hurt Sentiment

The local market fell further on Wednesday, with retail sentiment dented by back-to-back limit-down losses in selected lower liners on forced selling pressure. The FBM KLCI ended 2.66 points down at 1,491.21, after swinging between early low of 1,487.52 and high of 1,494.32, as losers swarmed gainers 832 to 265 on lower turnover of 5.22bn shares worth RM3.16bn.

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

Cautious retail sentiment, external headwinds from a weak China growth outlook and widening geopolitical risks in the Middle East should hurt sentiment in the immediate term. 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 Maxis & Tenaga

Further weakness on Maxis will be attractive to bargain for rebound upside towards the 200- day ma (RM4.00), with a breakout to aim for the 76.4%FR (RM4.14) and the 16/6/23 high (RM4.46) ahead, while the 38.2%FR (RM3.61) cushions downside. Tenaga need confirmed breakout above the 150%FP (RM10.64) to target the 161.8%FP (RM10.90) and 176.4%FP (RM11.22) going forward, while the 100-day ma (RM9.97) provides good uptrend support.

Asian Markets Sink on Weak China Data

Equities in Asia extended their declines on Wednesday, after China’s fourth-quarter gross domestic product growth missed estimates. The country’s economy grew by 5.2% in the October to December period last year, China’s National Bureau of Statistics said Wednesday, missing expectations of a 5.3% growth forecast by economists polled by Reuters. Separately, business morale at big Japanese manufacturers also slid in January for the first time in four months and was expected to remain subdued, the Reuters Tankan poll showed, underscoring concerns about weak demand from China and elsewhere. Hopes also dwindled on an interest rate cut in the near future following some hawkish comments from central bank officials.

Geopolitical tensions will also be in focus after Iran launched missile strikes in Iraq, Syria and Pakistan, citing security threats. Hong Kong’s Hang Seng index tumbled 3.71% to 15,276.60, and the Shanghai composite index fell 2.09% to 2,833.62. South Korea’s Kospi also dropped 2.47% to 2,435.90, while the small-cap Kosdaq dipped 2.55% to 833.05. In Japan, the Nikkei 225 extended losses for a second straight day, with the index slipping 0.40% to 35,477.75 and Australia’s S&P/ASX 200 lost 0.29% to 7,393.10.

Wall Street Ends Lower on Robust Economic Data

Wall Street’s major indexes extended declines overnight as robust economic data reduced the likelihood that the Federal Reserve could begin reducing its policy rate as early as March. The Dow Jones Industrial Average lost 0.25% to 37,266.67. The S&P fell 0.56% to 4,739.21, while the Nasdaq Composite slid 0.59% to 14,855.62. The weakness on Wall Street partly reflected ongoing uncertainty about the outlook for interest rates amid recent concerns the Federal Reserve won't lower rates as early as previously anticipated. Adding to worries, the Commerce Department released a report showing U.S. retail sales data for December came in stronger-than-expected, indicating a resilient consumer and putting aggressive rate cuts from the Federal Reserve into doubt.

A separate report released by the Federal Reserve showed an unexpected uptick in U.S. industrial production in the month of December. Meanwhile, economic activity over the past seven weeks has been largely stagnant, with both hiring and prices rising at a “modest to moderate” pace, according to the Federal Reserve’s Beige Book report released overnight. Charles Schwab shed 1.3% after reporting mixed quarterly results. Walgreens and Caterpillar both lost more than 3%, leading the Dow’s losses. Boeing advanced 1.3%, making it one of the biggest gainers in the Dow after weeks of heavy losses.

Source: TA Research - 18 Jan 2024