Blue Chips Trend Higher Led by Telcos

The blue-chip benchmark extended gains on Tuesday, helped by healthcare, telco and plantation heavyweights as investors returned to bargain hunt on economic recovery optimism. The FBM KLCI added 9.85 points to settle at 1,554.56, off an early low of 1,541.36 and high of 1,556.71, as gainers edged losers 505 to 484 on higher turnover totalling 4.28bn shares worth RM2.93bn.

Resistance at 1,559/1,580; Supports at 1,531/1,517

Blue chips should trend higher amid renewed rotational buying interest on telco counters, while the broader market consolidates pending the upcoming key US inflation data. Immediate index resistance will be from the recent 21-month high of 1,559, followed by 1,580, with stronger upside hurdle seen at the 1,600 level. Stronger supports cushioning downside will be at 1,531, 1,517 and 1,493, the respective rising 30-day, 50-day and 100-day moving averages.

Bargain Maxis & TM

Maxis will need sustained strength above the 50%FR (RM3.74) to promote further recovery towards the 61.8%FR (RM3.90) and 76.4%FR (RM4.09) ahead, while key retracement support at the 23.6%FR (RM3.39) limits downside risk. TM need a confirmed breakout above the

123.6%FP (RM6.03) to extend uptrend towards the 138.2%FP (RM6.23) and 150%FP (RM6.39) going forward, while the rising 50-day ma (RM5.75) provide uptrend support.

Most Asian Markets Edge Higher Ahead of U.S. CPI

Most Asian markets nudged higher on Tuesday ahead of US inflation data that’s set to influence the timing of the Federal Reserve’s pivot to monetary easing. Traders are awaiting more clues on whether the recent uptick in US consumer prices was just a blip or an indication the disinflationary trend has hit a roadblock. The inflation data could have a significant impact on the outlook for interest rates, with US Fed officials saying they need "greater confidence" that inflation is slowing before they consider cutting rates. However, the Fed is widely expected to leave rates unchanged at its monetary policy meeting next week. Expectations for a cut of at least 25 basis points at the June meeting are currently above 70%.

Meanwhile, Japan’s 2-year government bond yields hit a 13-year high amid speculation that the Bank of Japan will soon tighten monetary policy. The Hang Seng Index in Hong Kong jumped 3.05% to 17,093.50, to lead gains in Asia, while Australia’s the S&P/ASX 200 added 0.11% to 7,712.50. South Korea’s Kospi also rose 0.78% to 2,680.58 and the small cap Kosdaq climbed 1.57% to 889.71. In Japan, the Nikkei 225 inched down 0.06% to 38,797.51, while the Shanghai composite fell 0.41% to 3,055.93.

Wall Street Rises on Hot CPI Inflation Data

Wall Street’s main indexes ended sharpy higher overnight after key inflation data came in hotter than expected to help set expectations for the timing of a Federal Reserve interestrate cut. The Dow Jones Industrial Average gained 0.61%, to close at 39,005.49. The S&P 500 rose 1.12% to finish the session at 5,175.27, while the Nasdaq Composite advanced 1.54% to 16,265.64. The strength on Wall Street partly reflected a positive reaction to the Labor Department's highly anticipated report on consumer price inflation in the month of February. The Labor Department said its consumer price index climbed by 0.4% in February after rising by 0.3% in January. The increase matched economist estimates.

The CPI print is seen as influential, given Fed policymakers have said they want to be sure inflation is easing before beginning to bring rates down from their historically high level. Traders now turn their attention to the producer price index report due later this week and the Fed’s next monetary policy meeting later this month. Swaps are pricing in nearly 70% odds that the central bank will start easing in June and enact at least three quarter-point cuts over the course of 2024. Oracle surged more than 11% after beating Wall Street earnings estimates. Shares of chipmaker Nvidia climbed more than 7%.

Source: TA Research - 13 Mar 2024