TA Sector Research

Daily Brief - 12 Apr 2024

Publish date: Fri, 12 Apr 2024, 10:58 AM

Profit-Taking Mode as Middle East Tensions Escalate

Bursa Malaysia shares slid lower on cautious trade Tuesday, as investors risk appetite continued to deteriorate ahead of the Hari Raya Aidilfitri holidays and the shorter trading week. The FBM KLCI slipped 6.47 points to close at 1,553.51, off an early high of 1,565.57 and low of 1,553.43, as losers led gainers 496 to 466 on total turnover of 3.46bn shares worth RM2.06bn.

Resistance at 1,580/1,600; Support at 1,537/1,501

The local market should slip back into profit-taking consolidation mode ahead of the weekend, with the lack of domestic positive catalysts and worries over the elevated and spreading Middle East geopolitical tensions clouding market tone. Overhead resistance for the index remains at 1,580, followed by 1,600, with stronger upside hurdles at the 1,618 level. Immediate support stays at 1,537 and 1,501, the respective rising 50-day and 100-day moving averages, with better support seen at 1,480.

Bargain Globetronics & Inari Amertron

Any price dips in Globetronics shares should attract bargain hunters looking for rebound upside to the 61.8%FR (RM1.48), with next major resistance coming from the 76.4%FR (RM1.60) and the 18/12/23 high (RM1.80), going forward. Immediate support is capped at the 38.2%FR (RM1.28) and 23.6%FR (RM1.16). Likewise, Inari Amertron is attractive to bargain for upside to 76.4%FR (RM3.53), with confirmed breakout to challenge the high of 01/12/21 (RM3.86), and crucial chart support from the 50%FR (RM3.02).

Asian Markets Mostly Fall as US Inflation Raise Higher-for-Longer Rate Worry

Asian markets mostly fell after US inflation for March came in hotter than expected, raising worries the Federal Reserve could keep interest rates higher for longer. U.S. consumer price index climbed 3.5% on a year-on-year basis and 0.4% compared with the previous month. Economists surveyed by Dow Jones had expected a 0.3% month-on-month gain and 3.4% yearover-year rise. Excluding volatile food and energy components, the core CPI also accelerated 0.4% on a monthly basis while rising 3.8% from a year earlier, compared with respective estimates for 0.3% and 3.7%. China’s consumer inflation slowed to 0.1% in March from 0.7% in February. Economists polled by Reuters expected the consumer price index to climb 0.4% in March. The producer price index recorded a 2.8% fall year on year, in line with expectations.

Hong Kong’s Hang Seng index pared some losses, and was last down 0.26%, while the CSI 300 index in mainland China ended marginally lower at 3,504.24. South Korean markets resumed trade after a public holiday, with the Kospi reversing earlier losses to close nearly flat at 2,706.96. The small-cap Kosdaq shed 0.14% to finish at 858.1. South Korea’s liberal opposition parties scored a landslide victory in a parliamentary election held on Wednesday, likely handicapping incumbent president Yoon Suk Yeol and his conservative party’s efforts to push through their legislative agenda. Japan’s Nikkei 225 fell 0.35% to 39,442.63, but the broadbased Topix reversed losses and gained 0.15%, closing at 2,746,96. In Australia, the S&P/ASX 200 slipped 0.44% to 7,813.6, snapping a three-day winning streak.

Wall Street Rebound From Inflation-Fueled Sell-Off

The S&P 500 jumped and the Nasdaq Composite closed at a record overnight as tech shares climbed higher, rebounding from an earlier pullback over concerns of persistent inflation. The S&P 500 gained 0.74% to close at 5,199.06. The Nasdaq Composite added 1.68% to end the day at 16,442.20, a record level. The Dow Jones Industrial Average underperformed and slipped 2.43 points, or 0.01%, at 38,459.08. Technology stocks lifted the S&P 500 and Nasdaq Composite into positive territory midday Thursday as investors bought into the dip from earlier in the week. A host of “Magnificent Seven” members rallied. Nvidia jumped 4.1%. Amazon added 1.7% and hit an all-time high in the session, and Alphabet gained more than 2%. Apple popped 4.3% after Bloomberg News reported that the company would transition its Mac product line to artificial intelligence-focused chips.

The producer price index reading for March came in below estimates, providing some relief after Wednesday’s sell-off on a hot consumer prices report. Meanwhile, New York Fed President John Williams said during an event Thursday that there is no need for a policy change in the near term. This comes on the back of a hotter-than-expected March consumer price index reading released Wednesday, which sparked a market sell-off. Minutes from the Fed’s meeting last month also showed that some officials remain concerned about inflation’s path toward the central bank’s 2% goal. The early stages of earnings season continued Thursday, with CarMax falling more than 9% after disappointing on both top and bottom lines. Big bank earnings from JPMorgan, Wells Fargo and Citigroup are due on Friday.

Source: TA Research - 12 Apr 2024

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