Further Gain Over US Fed Confidence on Rate Cuts

Local stocks bounced back Thursday, helped by the overnight Wall Street rally to record highs after the US central bank signalled for 3 interest rate cuts before the end of this year. The FBM KLCI recouped 5.62 points to close at 1,541.41, off an early low of 1,534.66 and high of 1,542.33, as gainers led losers 631 to 451 on robust turnover of 4.02bn shares worth RM2.94bn.

Resistance at 1,559/1,580; Stronger Supports at 1,524/1,499

The local market should extend gains ahead of the weekend, following the firm regional tone on optimism over the US Federal Reserve’s confidence on further interest rate cuts, which means inflation should be well contained. Immediate index resistance remains at 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 are at 1,524 and 1,499, the respective rising 50- day and 100-day moving averages.

Bargain Sime Darby & Tenaga

Sime Darby will need to overcome the upper Bollinger band (RM2.70) to extend uptrend towards the 138.2%FP (RM2.75) and 150%FP (RM2.83), with the rising 100-day ma (RM2.43) providing uptrend support. Likewise, Tenaga need sustained strength above the upper Bollinger band (RM11.68) to extend higher towards the 176.4%FP (RM11.99) and 200%FP (RM12.58) going forward, with uptrend support cushioned by the rising 30-day ma (RM11.25) and 50-day ma (RM10.96).

Asian Markets Rise on Fed Rate Decision

Japan stocks closed at fresh all-time highs on Thursday as Asian markets climbed after the US Federal Reserve maintained its forecast for three rate cuts this year, while holding rates at 5.25%-5.50% in its latest meeting. The outlook for three cuts came from the Fed’s “dot plot,” a closely watched matrix of anonymous projections from the 19 officials who comprise the Federal Open Market Committee. The chart provides no indication for the timing of the moves. The updated dot plot indicated three cuts in 2025 as well – one fewer than the last time the grid was updated in December.

Japan’s Nikkei 225 closed 2.03% higher at 40,815.66, scaling a new all-time high as did the Topix, ending up 1.64% at 2,796.21. South Korea’s Kospi closed 2.41% up at 2,754.86 at its highest level since April 2022, while the small-cap Kosdaq was up 1.44% at 904.29. Hong Kong’s Hang Seng index ended 1.93% higher at 16,863.10, while mainland China’s CSI 300 closed down 0.12% at 3,581.09. In Australia, the S&P/ASX 200 advanced 1.16% to close at 7,784.9, after flash data from Judo Bank showed that the country’s business activity expanded at a faster pace in March compared with the prior month.

US Major Averages Surge to New Records on Rate Cut Optimism

Wall Street rose further overnight and added to the previous day’s gains, powering the major index averages to new record highs after the US central bank called for three more rate cuts by the end of this year. Thursday’s moves follow a winning day on Wall Street that sent the three major indexes to new closing highs, with the S&P 500 breaking above 5,200 for the first time. Those gains came as the Federal Reserve reiterated expectations for three interest rate cuts this year and kept borrowing costs unchanged at the conclusion of its two-day policy meeting. The Dow Jones Industrial Average jumped 269.24 points, or 0.68%, to close at 39,781.37. The S&P 500 advanced 0.32% to end at 5,241.53, while the Nasdaq Composite edged up 0.20% to finish at 16,401.84.

Micron Technology jumped 14% on strong earnings and notched its best day since December 2011. The news lifted the semiconductor sector, with Nvidia and Marvell Technology adding more than 1% each, while Broadcom jumped 5.6%. Some megacap tech stocks that led the recent rally also contributed to the session’s gains, with Microsoft adding nearly 1%. Social media company Reddit surged more than 48% in its market debut. Industrial stocks also outperformed, boosting their respective S&P sector by 1%. Stanley Black & Decker, Pentair and Rockwell Automation were among the notable gainers, jumping about 3% each.

Source: TA Research - 22 Mar 2024