Consolidation Ahead of City Day and Weekend Break

Bursa Malaysia shares slid into profit-taking consolidation on Tuesday, after the blue-chip benchmark hit resistance at 1,520 amid the more cautious regional tone following the liquidation of a top China property developer. The FBM KLCI eased 2.64 points to close at 1,512.75, off an early high of 1,520.31 and low of 1,511.84, as losers beat gainers 622 to 383 on slower trade totalling 3.77bn shares worth RM2.64bn.

Resistance at 1,520/1,550; Key Support at 1,484/1,474

Stocks should extend profit-taking consolidation ahead of the Federal Territory Day holiday, with more investors likely to be sidelined pending more market leads ahead of the weekend break. Immediate overhead resistance for the index is retained at 1,520, with stronger hurdles coming at 1,550 and 1,580. Key chart supports cushioning downside will be at 1,484, 1,474 and 1,461, the respective 30-day, 50-day and 100-day moving averages.

Bargain Maybank & Public Bank

Maybank needs to overcome the 150%FP (RM9.32) to sustain uptrend and aim for the

161.8%FP (RM9.51) and 176.4%FP (RM9.75) ahead, while the 100-day ma (RM8.98) provides good uptrend support. Public Bank will need breakout confirmation above the 4/4/22 peak (RM4.51) to target the 123.6%FP (RM4.72) and 138.2%FP (RM4.86) going forward, while key uptrend support from the 100-day ma (RM4.22) cushions downside.

Hong Kong Led Falls on Evergrande Liquidation

Asian markets mostly fell Tuesday, with Hong Kong leading losses in the region as investors struggled with the consequences from Evergrande’s liquidation. On Monday, shares of the embattled property developer were halted after plunging more than 20%. A Hong Kong court ruled to liquidate the firm, which was once considered one of China’s largest real estate firms. Hong Kong’s Hang Seng index sank 2.3%, led by declines in consumer cyclical and real estate stocks, while the mainland Chinese CSI 300 also fell 1.78% at 3,245.04. Japan’s Nikkei 225 inched up 0.11% to close at 36,065.86. This comes as Japan’s unemployment rate in December fell to 2.4%, lower than 2.5% in the month before and slightly below expectations. Economists polled by Reuters expected the unemployment rate to stay unchanged at 2.5%. South Korea’s Kospi lost 0.07% and ended at 2,498.81, reversing earlier gains made, while in Australia, the S&P/ASX 200 ended the day up 0.29% at 7,600.20, for a seventh straight day of gains.

S&P500 Ends Flat as Fed Rate Decision Looms

The S&P 500 ended Tuesday near the flatline as Wall Street waits for the latest Federal Reserve decision on interest rates. The benchmark slipped 0.06% to close at 4,924.97. The Dow Jones Industrial Average added 133.86 points, or 0.35% to end at 38,467.31, marking its seventh record close this year. The Nasdaq Composite pulled back 0.76% to finish at 15,509.90. The Labor Department reported an unexpected rise in job openings, hinting that the market remains too solid for the Fed to consider cutting its key policy rate as soon as March. The Fed is expected to end its policy meeting on Wednesday with a decision to let its key interest rate stand at 5.25%-5.50%. Its accompanying statement and Fed Chair Jerome Powell's subsequent press conference will be parsed for clues on the timing and number of rate cuts this year.

Fourth-quarter reporting season has shifted into overdrive, with announcements so far by 144 of the companies in the S&P 500. Of those, 78% have delivered consensus-beating earnings, according to LSEG. On aggregate, analysts now expect fourth-quarter earnings growth of 5.5% over last year, up from the 4.7% seen at the beginning of the month. United Parcel Service slid 8.2% after the package deliverer issued a disappointing annual revenue forecast, weighing on transports. General Motors jumped 7.8% after the automaker provided an upbeat 2024 earnings forecast and promised more capital return to shareholders. Citigroup and Bank of America rose over 3% following rating upgrades from Morgan Stanley, pushing the S&P 500 banks index up 2.1%.

Source: TA Research - 31 Jan 2024