Range Bound Ahead of Weekend Break

Stocks extended profit-taking consolidation on Wednesday and ahead of the City Day holiday, with most investors sidelined while awaiting the outcome of the US central bank’s first monetary policy meeting of the year. The FBM KLCI ended flat at 1,512.98 (+0.23), after swinging between low of 1,509.55 and high of 1,516.4, as losers beat gainers 635 to 401 on cautious trade totalling 3.67bn shares worth RM2.86bn.

Resistance at 1,520/1,550; Key Support at 1,486/1,476

The local market should stay range bound ahead of the weekend break, as investors pore over the US Federal Reserve’s monetary policy stance, and await further domestic market leads. Immediate overhead resistance for the index stays at 1,520, with stronger hurdles coming at 1,550 and 1,580. Key chart supports cushioning downside will be at 1,486, 1,476 and 1,462, the respective 30-day, 50-day and 100-day moving averages.

Bargain Hartalega & Kossan Rubber

Hartalega needs confirmed breakout above the upper Bollinger band (RM3.00) to enhance upside momentum towards RM3.20 and the 123.6%FP (RM3.44) going forward, while the 50- day ma (RM2.66) and 61.8%FR (RM2.42) cushions downside. Kossan Rubber will require convincing breakout above the recent high of RM2.17 to sustain further uptrend and aim for the 138.2%FP (RM2.31) and 150%FP (RM2.43) ahead, with the rising 50-day ma (RM1.85) providing uptrend support.

Asian Markets Mixed as Traders Digest Fed Comments, Economic Data

Asian markets closed mixed Thursday as traders digested overnight comments from US Federal Reserve Chairman Jerome Powell and economic data from the region. The Fed left interest rates unchanged and maintained the target range for the federal funds rate at 5.25 to 5.50% to support its dual goals of maximum employment and inflation at the rate of 2% over the longer run. The Fed said it does not expect it will be appropriate to lower rates until it has gained greater confidence that inflation is moving sustainably toward 2%. It acknowledged that inflation has eased over the past year but said it remains elevated. On economic front, the Caixin China general manufacturing purchasing managers’ index showed factory activity in the world’s second-largest economy expanded for a third-straight month in January.

Separately, South Korea's factory activity expanded in January for the first time in 19 months on improved demand for goods in key markets such as the United States and China. But activity shrank in Taiwan and Malaysia, and expanded at a slower pace in the Philippines, the surveys showed. In Australia, the S&P/ASX 200 closed down 1.20% at 7,588.20 to snap an eight-day winning streak, and the Shanghai composite index fell 0.64% to 2,770.74. Japan’s Nikkei 225 was down 0.76%, ending at 36,011.46, while the Topix slipped 0.67% to retreat from a 34-year high and finish at 2,534.04. In South Korea, the Kospi climbed 1.82% to close at 2,542.46, while the Hong Kong’s Hang Seng index rose 0.52% to 15,556.221.

Wall Street Rebound on Bargain Hunting

Wall Street’s major indexes rebounded overnight as traders chased for bargain hunting across the board and looked ahead to a spate of high-profile earnings the day after the Federal Reserve tossed cold water on lingering bets that the central bank would begin cutting its key interest rate as early as March. The Dow Jones Industrial Average rose 0.97% to 38,519.84. The S&P gained 1.25% to 4,906.19, while the Nasdaq Composite jumped 1.30% to 15,361.64. The strength on Wall Street comes as some traders see the sell-off on Wednesday as a buying opportunity amid optimism the markets will resume the upward trend seen throughout much of January. Those losses come after Fed Chair Jerome Powell in his post-meeting conference discouraged investor hopes for a rate cut as soon as March, sending equities tumbling. Meanwhile, the "Magnificent Seven" will take centre stage after the closing bell, with Apple, Amazon, and Meta set to report earnings.

Fourth quarter reporting season is going full-bore, with 208 of the companies in the S&P 500 having reported. A raft of economic data showed rising productivity helping to cap labour costs, while an increase in announced layoffs and weekly jobless claims provided further evidence of softening in the labour market, which is viewed by the Fed as a precondition to assuring a sustainable downward path for inflation. Of those, 80% have delivered consensusbeating earnings, according to LSEG. Analysts now expect aggregate S&P 500 earnings growth of 6.4% year-on-year for the October-December period, an improvement over the 4.7% growth seen on Jan. 1, per LSEG.

Source: TA Research - 2 Feb 2024