Overnight US Rebound to Revive Local Market

Stocks slipped on Wednesday, copying regional weakness as investors pared back expectations for the pace and scale of interest rate cuts by the US Federal Reserve this year. The FBM KLCI fell 2.04 points to end at 1,529.33, off an early low of 1,521.79 and high of 1,530.95, as losers edged gainers 503 to 387 on total turnover of 2.8bn shares worth RM1.92bn.

Supports at 1,497/1,479; Resistance at 1,550/1,580

The overnight rebound on Wall Street should revive the local market today, but undertone remains cautious as uncertainty over interest rate outlook persist. Key index supports cushioning downside remains at 1,497, 1,479 and 1,461, the respective rising 30-day, 50-day and 100-day moving averages, while immediate overhead resistance stays at 1,550, with stronger upside hurdles at 1,580 and 1,618.

Bargain Aemulus & Unisem

Investors should look to bargain on weakness Aemulus for recovery upside to the upper Bollinger band (34sen), with further strength to aim for the 76.4%FR (39sen) and 61.8%FR (45sen) ahead. Key chart supports are at the lower Bollinger band (28sen) and 25sen. Similarly, any dips on Unisem should attract buyers ahead of recovery towards the 61.8%FR (RM3.40) and 76.4%FR (RM3.74) going forward, while crucial supports are at the 38.2%FR (RM2.80) and 23.6%FR (RM2.52).

Asian Markets Slip on Rate Jitters

Most Asian markets fell on Wednesday, after the hotter-than-expected U.S. inflation report raised doubts that the Federal Reserve would be able to cut rates several times this year. The CPI data came as a disappointment for investors after a recent downdraft in price pressures that helped build expectations for rate cuts this year. The numbers also gave credence to the wait-and-see approach highlighted by Jerome Powell and a chorus of Fed speakers. That kept pressure on global stocks, which had rallied strongly towards the end of last year on aggressive bets for rate cuts by major central banks globally in 2024.

In Australia, the S&P/ASX 200 slid 0.74% to close at 7,547.70, extending its losing streak to a third day. Japan’s Nikkei 225 also retreated from 34-year highs, falling 0.69% to 37,703.32, and the Topix lost 1.05% to 2,584.59. South Korea’s Kospi dropped 1.10% to 2,620.42, while Hong Kong’s Hang Seng index reversed losses to gain 0.84% to 15,879.38, bucking the wider downturn as the city returned to trade after the Lunar New Year holiday. Mainland Chinese markets will remain closed for the week.

Wall Street Rebound on Bargain Hunting

Wall Street’s major indexes closed higher overnight as some traders look to pick up stocks at reduced levels after hotter-than-expected inflation data drove a sell-off and dashed hopes for interest rate cuts in early spring. The Dow Jones Industrial Average rose 0.40% to 38,424.27. The S&P gained 0.96% to 5,000.62, while the Nasdaq Composite jumped 1.30% to 15,859.15. The rebound on Wall Street partly reflects bargain hunting, with some traders seeing the sharp pullback during Tuesday's session as a buying opportunity amid ongoing optimism about the outlook for the markets. Traders have all but ruled out a March interest rate cut after the January Consumer Price Index came in hotter than expected.

Providing some relief, Chicago Fed President Austan Goolsbee said the path back to the central bank's 2% inflation target would still be on track even if price increases run a bit hotterthan-expected over the next few months. Lyft shares jumped 35% after the ride-hailing company posted better-than-expected earnings in the fourth quarter. Shares of Nvidia nudged nearly 2.5% higher, sending the chipmaker’s market capitalization briefly above that of fellow “Magnificent 7” member Alphabet’s.

Source: TA Research - 15 Feb 2024