Sideways in Absence of Clear Market Leads

Blue chips stayed range bound on Thursday, with investors mostly sidelined following the Chinese New Year holidays amid lacking positive domestic market leads. The FBM KLCI slipped 0.95 points to close at 1,528.38, off an early high of 1,532.66 and low of 1,525.39, but gainers led losers 557 to 370 on higher turnover of 3.68bn shares worth RM2.27bn.

Supports at 1,501/1,488; Resistance at 1,550/1,580

The local market should extend sideways trade ahead of the weekend, given absence of clear market leads and as investors assess the impact of sustained high inflation on the interest rate outlook. Key index supports cushioning downside remains at 1,501, 1,488 and 1,471, 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 1,600.

Bargain Public Bank & RHB Bank

Public Bank will need breakout confirmation above the 4/4/22 peak (RM4.51) to fuel further upside momentum towards the 123.6%FP (RM4.72) and 138.2%FP (RM4.86) ahead, with uptrend support from the 100-day ma (RM4.25) cushioning downside. RHB Bank need decisive breakout above the upper Bollinger band (RM5.66) to extend uptrend towards the 123.6%FP (RM5.75) and 138.2%FP (RM5.90) going forward, while the 200-day ma (RM5.46) provides uptrend support.

Asian Markets Rise as Traders Digest Economic Data

Most Asian markets rose on Thursday, as traders digested a slew of economic data across the region and assess when the Federal Reserve is likely to start its easing cycle after a run of strong economic data. Trader expectations of early and deep interest rate cuts by the Fed have been besieged by a slew of data that has underscored the resiliency of the U.S. economy and labour market, with data this week showing persistent inflation. Traders have further scaled back Fed cut bets and have largely given up hope of a cut in March. On economic news, data showed Japan's economy slipped into recession as it unexpectedly shrank for a second straight quarter on weak domestic demand, raising uncertainty about the central bank's plans to exit its ultra-easy policy this year.

Singapore also saw its fourth-quarter GDP grow 2.2% year on year, lower than the 2.5% expected. The city state also revised its third-quarter GDP growth rate from 2.8% to a sharply lower figure of 1%. Japan’s Nikkei 225 saw a late rally, rising 1.21% to close at 38,157.94 and the broad-based Topix climbed 0.28% to end at 2,591.85. In Australia, the S&P/ASX 200 rose 0.77%, snapping a three-day losing streak and ending at 7,605.70. In South Korea, the Kospi fell 0.25% to 2,613.80, while mainland Chinese markets remain closed Thursday for the Lunar New Year holiday.

Wall Street Rises as Traders Digest Economic Data

Wall Street’s major indices finished higher overnight as traders looked past mixed economic data before an inflation reading that will help define the Federal Reserve’s next steps. The Dow Jones Industrial Average rose 0.91% to 38,773.12. The S&P gained 0.58% to 5,029.73, while the Nasdaq Composite added 0.30% to 15,906.17. Traders have spent the week assessing where things stand in the U.S. economy, but a slew of indicators have given mixed signals so far. Before the start of trading, the Commerce Department released a report showing retail sales fell by much more than expected in the month of January. The Federal Reserve also released a report showing industrial production in the U.S. unexpectedly edged slightly lower in the month of January. On late Friday, a producer price index report will provide more clues about the economy, which could guide the Fed in coming meetings.

This comes as many on Wall Street noted the inflation print could give investors pause. However, for now, it likely isn't enough to change the overall narrative that a soft-landing for the US economy is in sight. Earnings season also continued to paint a muddled picture of corporate America. TripAdvisor jumped 11% after beating estimates on the top and bottom lines. On the other hand, Cisco shares were down 2% after the tech company announced layoffs and weak forward sales projections. Tesla and Meta Platforms outperformed, rising 2% respectively. Shares of Wells Fargo rose 7% after the Office of the Comptroller of the Currency ended a key penalty for the bank.

Source: TA Research - 16 Feb 2024