Recovery as Reversal of Losses Encourage Bargain Hunting

Stocks rose further on Tuesday, with certain small caps recouping some of their recent heavy losses due to oversold rebound and light bargain hunting interest. The FBM KLCI added 4.92 points to settle at 1,496.11, off an early low of 1,490.2 and high of 1,500.39, as gainers led losers 511 to 470 on higher turnover of 5.16bn shares worth RM3.33bn.

Resistance at 1,500/1,510; Key Support at 1,475/1,468

The local market should move into recovery mode, with the reversal of recent heavy losses on selected small cap stocks and rotational plays to encourage bargain hunting. 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 cushioning downside will be at 1,475, 1,468 and 1,457, the respective 30-day, 50-day and 100-day moving averages.

Bargain SunCon & WCT Holdings

Sunway Construction need sustained strength above the 150%FP (RM2.30) to enhance upward momentum towards the 161.8%FP (RM2.38) and 176.4%FP (RM2.46) ahead, with the rising 50-day ma (RM1.98) providing uptrend support. WCT Holdings will need to overcome

the 61.8%FR (56sen) to fuel further recovery and aim for the 76.4%FR (61sen) and the 15/10/21 high (69sen) going forward, while the 200-day ma (48sen) limits downside risk.

Hong Kong Stocks Jump on China Stimulus Report

Hong Kong stocks rebounded Tuesday to lead gains in Asian markets, while Japan’s Nikkei 225 index was marginally lower after the Bank of Japan kept its monetary policy unchanged in its first policy meeting of the year. Hong Kong’s Hang Seng index jumped 2.63%, with tech stocks leading the charge. Bloomberg reported that Chinese authorities were considering a stimulus package worth 2 trillion yuan (USD278.53 billion) to stabilize the country’s stock markets. Mainland China’s CSI 300 rose 0.4%, rebounding off a near-five year low, to close at 3,231.93.

Videogame stocks in Hong Kong rose after China’s gaming authority removed draft rules from its website. The measures proposed last month would have restricted spending and rewards for playing video games. The Nikkei 225 slipped marginally to close at 36,517.58, while the Topix fell 0.11% to 2,542.07. In Australia, the S&P/ASX 200 marked a third straight day of gains, rising 0.51% and ending at 7,514.9. South Korea’s Kospi added 0.58% to 2,478.61, while the small-cap Kosdaq index was flat and ended at 840.11.

Dow Ends Lower, as S&P 500 Notches New Closing High

The Dow Jones Industrial Average fell overnight, pulling back from record-breaking highs as traders pored through the latest batch of corporate earnings. The blue-chip Dow slid 96.36 points, or 0.25%, to 37,905.45, retreating below the 38,000 level that was crossed for the first time on Monday. The S&P 500 rose by 0.29% to 4,864.60, a fresh all-time closing high. The technology-heavy Nasdaq Composite advanced 0.43% to 15,425.94. The 30-stock Dow was pressured by an 11% decline in 3M following disappointing guidance. Johnson & Johnson fell 1.6% after reporting earnings. United Airlines rose more than 5% after reporting strong fourth-quarter results. However, the airline operator said it expects a first-quarter loss from the grounding of Boeing 737 Max 9 airplanes, the model involved in the Alaska Airlines emergency earlier this month. Shares of other airline operators rose in tandem. Southwest Airlines climbed more than 3%, while American Airlines, Delta Air Lines and Alaska added more than 2%.

Traders are also awaiting two key economic data releases later in the week. The preliminary fourth-quarter gross domestic product figure is due Thursday, followed by the Commerce Department’s closely-watched personal consumption expenditures price index for December on Friday. Investors will monitor Netflix earnings after the bell on Tuesday. Technology remains a focus later in the week, with IBM and Tesla slated for Wednesday and Intel expected Thursday. Outside of tech, results from American, Alaska and Southwest are also due Thursday.

Source: TA Research - 24 Jan 2024