TA Sector Research

Daily Brief - 29 Feb 2024

Publish date: Thu, 29 Feb 2024, 11:23 AM

Downward Bias as Investors Assess Earnings

Profit-taking dragged Tenaga and key utility heavyweights lower on Wednesday, as disappointing current corporate earnings and cautious regional tone dampened sentiment. The FBM KLCI dipped 13.21 points to end at the day’s low of 1,545.59, off an early high of 1,556.69, as losers trashed gainers 780 to 311 on higher turnover of 4.77bn shares worth RM3.3bn.

Supports at 1,544/1,522; Resistance at 1,580/1,600

The local market should trade sideways with downward bias as investors assess the tail-end of the current corporate earnings season, while awaiting firmer leads from the global inflation trend. Key index supports cushioning downside on profit-taking pullbacks will be at 1,544,1,522 and 1,506, the respective rising 10-day, 30-day and 50-day moving averages. Immediate resistance remains at 1,580, with stronger upside hurdles coming at 1,600 and 1,620.

Bargain SKP Resources & VSI

SKP Resources need to decisively tackle overhead resistance from the 100-day ma (80sen) and 200-day ma (88sen) to enhance upside momentum and aim for the 61.8%FR (RM1.03) and 50%FR (RM1.15) ahead, with the lower Bollinger band (66sen) capping downside risk. VSI will need a confirmed breakout above the 76.4%FR (79sen) to target the 61.8%FR (84sen) and 50%FR (88sen) going forward, while the recent 31/1/24 pivot low (70sen) cushion downside.

Asia Mostly Down Led by Hong Kong After Budget Call

Asian stocks mostly fell Wednesday as New Zealand’s central bank kept its interest rate steady, while Hong Kong scrapped rules to tighten its property market at its budget announcement. Hong Kong said it would do away with property curbs in an effort to buoy its real estate sector. Financial Secretary Paul Chan said he expected the economy to grow in a range of 2.5% to 3.5% this year. Hong Kong’s Hang Seng index shed 1.5%, while the Hang Seng Property index turned negative after jumping nearly 2% earlier in the session. The Reserve Bank of New Zealand held its official cash rate at 5.50%, keeping it at a 15-year high, while warning that inflation remained well above its target range.

China’s manufacturing purchasing managers’ index reading and the U.S. personal consumption expenditures price index — the Federal Reserve’s preferred inflation gauge — are due Thursday. Australia’s S&P/ASX 200 ended about flat at 7,660.40, while New Zealand’s benchmark S&P/NZX 50 index closed 0.6% higher at 11,763.32 after the RBNZ decision. The CSI 300 index fell 1.3% to close at 3,450.26. Japan’s Nikkei 225 ended 0.08% lower at 39,208.03, while South Korea’s Kospi closed out gains of 1% at 2,652.29, rising after two straight days of declines.

US Stocks Ease, Dollar Rises Ahead of Key US Inflation Data

Wall Street fell slightly overnight while Treasury yields edged down and the dollar rose as investors were wary the day before U.S. inflation data that could influence Federal Reserve policy. January's U.S. personal consumption expenditures price index (PCE), the Fed's preferred inflation measure, is due on Thursday. Economists polled by Reuters poll expect the index to have risen 0.3% on a monthly basis after a 0.2% increase in December. The S&P 500 pulled back 0.17% to close at 5,069.76. The Nasdaq Composite fell 0.55% to 15,947.74. The Dow Jones Industrial Average shed 23.39 points, or 0.06%, to end at 38,949.02 and notch a third straight day of losses.

UnitedHealth lost nearly 3% to lead the Dow lower. Intel and Alphabet declined 1.7% and 1.8%, respectively. The PCE report will come as the market tries to build on the gains that took the Dow and S&P 500 to record highs. This week, the market has struggled, however, pulling back modestly. The major indexes are pacing for their second negative week in three. The recent slump, particularly for the tech sector, has raised questions about the staying power of a rally fueled by excitement over artificial intelligence.

Source: TA Research - 29 Feb 2024

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