Forced Selling Hurt Retail Sentiment

Stocks extended profit-taking correction Thursday, led by utility, construction and technology counters, while persistent limit-down losses on lower liners hurt retail sentiment. The FBM KLCI fell 12.03 points to close at 1,479.18, off an early high of 1,492.53 and low of 1,478.03, as losers trashed gainers 885 to 218 on higher turnover of 6.09bn shares worth RM3.61bn.

Key Supports at 1,465/1,455; Resistance at 1,500/1,510

Retail sentiment should remain weak given worries over persisting forced selling on margined positions in lower liners, with global growth and geopolitical concerns also dampening market tone. Key index supports to watch for on correction extension will be 1,465 and 1,455, the respective 50-day and 100-day moving averages, with 1,440/1,430 as stronger supports. Immediate overhead resistance is at 1,500/1,510, which restricted upside in Jan 2023, with next key hurdles at 1,520 and 1,550.

Bargain Hibiscus & Wasco

Hibiscus should attract buyers at current levels, with key chart support from the 200-day ma (RM2.45) restricting downside, while a convincing break above the 50%FR (RM2.73) should aim for the 61.8%FR (RM2.93) and 76.4%FR (RM3.18) ahead. Wasco will need breakout confirmation above the 19/9/23 high (RM1.09) to fuel upside momentum towards the 123.6%FP (RM1.22) and 138.2%FP (RM1.30) going forward, while the 200-day ma (94sen) limits downsie risk.

Asian Markets Mixed Amid Rate-Cut Doubts

Asian markets traded mixed Thursday as strong retail sales data from the U.S. cast fresh doubt on the prospect the Federal Reserve will cut rates in March. 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. Hawkish remarks from European Central Bank and U.S. Federal Reserve officials also tempered interest rate cut expectations. Meanwhile, data showed China's economic growth rate for the fourth quarter missed market expectations, also adding to the risk-off appetite for equities. Elsewhere, geopolitical tensions rattled traders as the Pakistani military carried out targeted strikes against militant hideouts in Iran after Tehran launched similar attacks the day before.

On economic news, Australia’s employment fell sharply in December after two months of surprisingly strong growth, while the jobless rate stayed at a 1-1/2 year high. Australian markets extended their losses to a fifth straight day, with the S&P/ASX 200 falling 0.63% and closing at 7,346.50, and the Shanghai composite index rose 0.43% to 2,845.78. In Japan, the Nikkei 225 slipped inched down by 0.03% to 35,466.17, while the Topix fell 0.17% to 2,492.09. In South Korea, the Kospi gained 0.17% to 2,440.04, and the small-cap Kosdaq added 0.87% to 840.33.

Wall Street Higher as Tech Leads Bounce

Wall Street’s major indexes gained ground overnight, as optimism on artificial intelligence continued to drive semiconductor shares higher despite rising uncertainty about whether the Federal Reserve will cut interest rates as quickly as markets are expecting. The Dow Jones Industrial Average rose 0.54% to 37,468.61. The S&P gained 0.88% to 4,780.94, while the Nasdaq Composite jumped 1.35% to 15,055.65. Tech stocks helped lead the way higher on Wall Street, with shares of Apple jumping by 3.3% after Bank of America upgraded the stock to buy, calling for more than 20% upside over the next 12 months. Taiwan Semiconductor, the world's biggest contract chip maker also helped lead the sector higher, soaring 9.8% after reporting better than expected fourth quarter results and providing upbeat guidance.

Meanwhile, a report from the U.S. Labour Department showed initial claims for unemployment benefits slid to their lowest level since Sept. 2022, casting further doubt as to whether the U.S. central bank will cut its Fed funds target rate at the conclusion of its March policy meeting. Traders hope for rapid interest-rate cuts have been dented in recent days, due to strong economic data and pushback from policy makers at the Federal Reserve and European Central Bank. Atlanta Fed President Raphael Bostic said he doesn't see the Federal Reserve cutting interest rates until the third quarter, later than the market's current projection for March, unless there is "convincing" evidence of inflation's decline.

Source: TA Research - 19 Jan 2024