Recovery Mode on Reversal of Small Cap Losses

Bursa Malaysia shares rose on Monday, led by the utility, construction and property sectors, as optimism over infrastructure plays offset concerns over the limit-down losses on certain small cap stocks. The FBM KLCI gained 4.82 points to close at 1,491.19, off an early low of 1,485.51 and high of 1,493.98, as gainers led losers 644 to 375 on total turnover of 4.79bn shares worth RM3.12bn.

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

Stocks should move back to recovery mode, given the assurance by regulators on the stock market’s strong fundamentals and some reversal of the heavy losses suffered by selected small cap stocks. Immediate overhead resistance on the index stays at the 1,500/1,510 zone, with next key hurdles seen at 1,520 and 1,550. Key chart supports to watch will be 1,465 and 1,455, the respective 50-day and 100-day moving averages, with 1,440/1,430 as stronger supports.

Bargain Globetronics & Unisem

Globetronics looks attractive to bargain at current levels, with key chart support from the 200-day ma (RM1.41) capping downside risk, while a breakout above the 100-day ma (RM1.56) should target the 61.8%FR (RM1.63) and 76.4%FR (RM1.79) ahead. Unisem need breakout confirmation above the 61.8%FR (RM3.40) to enhance upside momentum towards the 76.4%FR (RM3.74) and 22/11/21 high (RM4.28) going forward, while the 200-day ma (RM3.14) restricts downside.

Asian Markets Mixed as China Loan Prime Rates Unchanged

Asian markets were mixed on Monday as China kept its loan prime rates unchanged, as expected. The Nikkei 225 hit a near 34-year high to end 1.62% higher at 36,546.95, while the broader Topix gained 1.39% to close at 2,544.92. On the other hand, Hong Kong’s Hang Seng index fell 2.3%, led by real estate stocks after the People’s Bank of China left the one- and five-year loan prime rates unchanged at 3.45% and 4.2%, respectively. China’s CSI 300 index ended 1.56% lower at 3,218.90. The Bank of Japan kicked off its two-day monetary policy meeting, and will announce its policy decision on Tuesday. Japan will release its trade balance data for December on Tuesday and January inflation numbers for Tokyo on Friday. In Australia, the S&P/ASX 200 ended 0.75% higher at 7,476.60, extending gains from Friday and starting the week on a positive note. South Korea’s Kospi fell 0.34% to close at 2,464.35 while the small-cap Kosdaq dropped 0.35% to 839.69.

Wall Street Inch Higher Ahead of Economic Data, Earnings

Wall Street’s major indexes inched higher overnight as traders awaited the latest economic data and corporate result this week. The Dow Jones Industrial Average rose 0.36% to 38,001.81. The S&P gained 0.22% to 4,850.43, while the Nasdaq Composite added 0.32% to 15,360.29. Traders will be closely watching a slate of economic reports due out this week, including fourth quarter gross domestic product on Thursday and the Fed’s favourite inflation measure, December’s personal consumption expenditures price index on Friday. Both reports will help shape how Fed officials view monetary policy moving forward. Quarterly results from the likes of Netflix, Intel, IBM and Tesla are also likely to attract attention in the coming days, as tech earnings results could well indicate where the market heads in the short term.

Among the Dow components, Apple shares rose about 1%. Biopharmaceutical Amgen hit an intraday record high to end the session fractionally higher. Goldman Sachs shares hit a 52- week high, settling up more than 1%. Macy’s rose more than 3% after rejecting a USD5.8 billion proposal to take the retailer private. SolarEdge jumped more than 4% on the back of the company announcing it would lay off 16% of its workforce. Boeing came under more pressure after the FAA urged airlines to carry out checks on another class of 737 jets that uses the same door plugs as on the Max 9 that suffered a midair blowout.

Source: TA Research - 23 Jan 2024