TA Sector Research

Daily Brief - 23 Feb 2024

Publish date: Fri, 23 Feb 2024, 11:00 AM

Extended Profit-Taking Breather

The blue-chip benchmark dipped for profit-taking breather a second day given overbought conditions after its recent rally to a 21-month high, with losses led by plantation, energy and utility heavyweights. The FBM KLCI fell another 6.91 points to close at 1,545.49, off an early high of 1,551.97 and low of 1,542.72, but gainers led losers 571 to 462 on total trade of 3.72bn shares worth RM2.57bn.

Supports at 1,536/1,513; Resistance at 1,580/1,600

Stocks should extend profit-taking breather ahead of the weekend, pending fresh domestic catalysts to prop up sentiment and offset caution from recent weakness in the local currency. Key supports cushioning downside on profit-taking pullbacks will be at 1,536, 1,513 and 1,499, the respective rising 10-day, 30-day and 50-day moving averages. Immediate resistance is fixed at 1,580, with stronger upside hurdles coming at 1,600 and 1,620.

Bargain Axiata & CelcomDigi

Axiata need to overcome the 38.2%FR (RM2.82) decisively to boost upside possibilities towards the 50%FR (RM3.02) and 61.8%FR (RM3.21) going forward, with the 200-day ma (RM2.55) cushioning downside risk. CelcomDigi will need convincing breakout above the 138.2%FP (RM4.51) to extend uptrend towards the 150%FP (RM4.64) and 161.8%FP (RM4.78) ahead, while the lower Bollinger band (RM4.16) cushions downside.

Nikkei Led Asian Markets Higher on AI Optimism

Asian markets ended higher on Thursday, boosted by strong gains in the technology sector after US chipmaker Nvidia's upbeat outlook on robust demand for AI related chips. The tech company’s shares soared as much as 11% in post-market trade after it said first-quarter revenue would likely hit USD24 billion, above prior estimates of around USD22 billion. Traders in Asia will be keeping a close eye on chip and AI-related stocks as the earnings were predicted to be a catalyst for market sentiment. Traders also shrugged off the US Fed's latest monetary minutes, where officials remain wary of cutting interest rates too quickly.

On economic news, Japan's factory activity extended declines and service sector growth eased in February, surveys showed on Thursday, suggesting business conditions were worsening as the economy struggles to emerge from recession. The Nikkei 225 jumped 2.19% to 39,098.68, surpassing the previous record high of 38,915.87 reached in 1989. In Australia, the S&P/ASX 200 was up by 0.04% to close at 7,611.20, while the Shanghai composite index jumped 1.27% to 2,988.36. South Korea’s Kospi also gained 0.41 to 2,664.27, and the Kosdaq added 0.70% to 870.11.

Wall Street Rally on AI Optimism

Stocks on Wall Street powered higher overnight after artificial intelligence darling Nvidia quarterly report beat expectations and reignited a rally fueled by optimism about artificial intelligence. The Dow Jones Industrial Average rose 1.18% to 39,069.11. The S&P jumped 2.11% to 5,087.03, while the Nasdaq Composite surged 2.96% to 16,041.62. The rally on Wall Street largely reflects a positive reaction to earnings news from Nvidia after the chip designer forecast a roughly three-fold surge in first-quarter revenue on strong demand for its AI chips and beat expectations for fourth-quarter revenue. Shares of other companies, seen as beneficiaries of the AI boost, also got a shot in the arm. Nvidia's rival Advanced Micro Devices, server component supplier Super Micro Computer and Arm Holdings jumped between 9.2% and 33.2%.

Meanwhile, trader’s bets are tilted towards June as the starting point for the first rate cut from the Federal Reserve. Fed Vice Chair Philip Jefferson said he would be looking at the totality of incoming economic data in assessing the time for the U.S. central bank to begin cutting its benchmark policy rate. In U.S. economic news, a report released by the Labor Department showed an unexpected dip in first-time claims for U.S. unemployment benefits in the week ended February 17th. Other tech names were also higher. Facebook parent Meta and Amazon gained more than 4% and 3%, respectively. Microsoft and Netflix advanced more than 2%.

Source: TA Research - 23 Feb 2024

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