Profit-Taking Breather on Weak MYR

Stocks stalled for profit-taking consolidation on Wednesday, as investors turned cautious following the ringgit’s fall to the lowest since the Asian financial crisis, and await further cues on the US interest rate direction. The FBM KLCI slipped 3.19 points to close at 1,552.40, after ranging between early high of 1,554.95 and low of 1,547.49, as losers beat gainers 652 to 386 on steady turnover of 3.65bn shares worth RM2.71bn.

Resistance at 1,580/1,600; Supports at 1,534/1,511

The local market should pause for profit-taking breather and turn cautious after the index’s rally to a 21-month high, given the ringgit’s weakness and pending stronger clues on US interest rate policy. Immediate resistance is retained at 1,580, with stronger upside hurdles coming at 1,600 and 1,620. Key supports cushioning downside on profit-taking pullbacks will be at 1,534, 1,511 and 1,497, the respective rising 10-day, 30-day and 50-day moving averages.

Bargain Globetronics & Inari

Globetronics appear attractive to bargain at current levels for recovery upside towards the 61.8%FR (RM1.63) and 76.4%FR (RM1.79) ahead, with downside cushioned by the 38.2%FR (RM1.37). Inari will need breakout confirmation above the 61.8%FR (RM3.28) to fuel further upside momentum towards the 76.4%FR (RM3.55) and 22/11/21 high (RM4.00) going forward, with the 100-day ma (RM2.99) and 200-day ma (RM2.86) cushioning downside.

Asian Markets Mixed Ahead of Fed Policy Outlook

Asian markets close mixed on Wednesday, as traders remain cautious and seemed reluctant to make significant moves ahead of the release of the minutes of the US Fed's latest monetary policy meeting for clues on the policy outlook. Data last week showed sticky U.S. inflation, prompting investors to push back expectations of an early start to the rate-cut cycle. Markets are now pricing in June as the starting point for easing, compared with March at the start of the year. On the monetary policy front, traders will get a chance to assess minutes of the Federal Reserve's last meeting later in the day for any further clues on when the U.S. central bank will start its easing cycle.

Japan’s Nikkei 225 fell 0.26% to 38,262.16, after Japanese manufacturers’ business confidence tumbled to -1 in February, compared with the previous month’s reading of 6, according to the Reuters Tankan poll. In Australia, the S&P/ASX 200 lost 0.66% to 7,608.40, while South Korea’s Kospi fell 0.17% to 2,653.31. In China, the Shanghai composite index bucked the gloomy regional trend and rose 0.97% to 2,950.96, while Hong Kong’s Hang Seng index added 1.57% to 16,503.10.

Nasdaq Slips as Traders Brace for Nvidia Earnings

The Nasdaq Composite slid for a third session in a row as traders counted down to highstakes earnings from AI darling Nvidia and digested the release of Federal Reserve minutes. The Dow Jones Industrial Average rose 0.13% to 38,612.24. The S&P 500 gained 0.13% to end at 4,981.80. The tech-heavy Nasdaq Composite lost 0.32% to close at 15,580.87. Expectations are running high for the chipmaker's fourth quarter results, seen both as a barometer for the AI trade and as a potential turning point for stocks more broadly. Shares of Nvidia have skyrocketed this year amid optimism about demand for its AI chips, but traders are wary of whether its results will support further upside.

Meanwhile, minutes from the Federal Reserve’s latest gathering show most officials remained more worried about the risk of cutting interest rates too soon than keeping them high for too long and damaging the economy. Recent discouraging data has prompted a wavering in conviction that the central bank will cut rates in June, seen as the most probable timing. In corporate news, Palo Alto Networks plunged 28.2% after the cybersecurity firm forecast third-quarter billings below analyst estimates. Separately, Walgreens shares slid as much as 3% after the pharmacy giant lost its spot on the blue-chip Dow index to Amazon.

Source: TA Research - 22 Feb 2024