Extend Profit-Taking Breather as Market Assess US FOMC Meet

Briefly after touching a fresh near two-year high on Tuesday, the local blue-chip benchmark dipped for profit-taking correction ahead of the Workers’ Day holiday, given the short-term overbought technical momentum. The FBM KLCI shed 6.69 points to end at the day’s low of 1,575.97, off an early high of 1,589.06, but gainers edged losers 524 to 521 on steady turnover of 4.18bn shares worth RM3.75bn.

Resistance at 1,600/1,620; Supports at 1,553/1,543

The local market should extend profit-taking breather today, with market players expected to stay sidelined to assess the outcome of the US FOMC meeting regarding the path for interest rates ahead. Immediate resistance for the index is retained at 1,600, with stronger upside hurdles seen at 1,620 and then 1,640. Key supports will be at 1,553, 1,543 and 1,521, the respective rising 30-day, 50-day and 100-day moving averages.

Bargain Aemulus & Unisem

Aemulus remains in base building mode, pending breakout above the upper Bollinger band (38sen) which is key to aim for the 38.2%FR (41sen) and 50%FR (47sen) ahead, while the 200- day ma (32sen) cushions downside risk. Unisem will need breakout confirmation above the

1/4/24 high (RM3.92) to fuel upside momentum towards the 123.6%FP (RM4.30) and 138.2%FP (RM4.54) going forward, while the 200-day ma (RM3.32) cushions downside.

Asian Markets Fall Ahead of Fed Policy Decision

Asian markets ended lower in thin holiday trading on Wednesday, as traders looked ahead to the Federal Reserve’s upcoming interest rate decision. The Federal Reserve Open Market Committee gathers on Tuesday for its monetary policy meeting, which is expected to culminate on late Wednesday with a decision to leave the Fed funds target rate in the 5.25% to 5.50% range. The accompanying statement, as well as Fed Chair Jerome Powell's subsequent press conference, will be parsed for clues regarding the central bank's expected path forward with respect to interest rate cuts.

In economic news, the manufacturing sector in Australia continued to contract in April, albeit at a slower pace, the latest survey from Judo Bank revealed on Wednesday with a manufacturing PMI score of 49.6. Japan’s Nikkei 225 inched down 0.34%, reversing earlier losses and closing at 38,274.05, while the broad based Topix was 0.5% lower to end at 2,729.40. The Australian S&P/ASX 200 lost 1.23%, finishing at 7,569.90, while most markets are closed for the Labor Day holiday.

Wall Street End Mixed Amid Powell Remarks

Wall Street’s main indexes finished mixed overnight as traders assessed Federal Reserve Chair Jerome Powell's speech and weighed economic data. The Dow Jones Industrial Average added 0.23% to close at 37,903.29. The S&P 500 lost 0.34% to close at 5,018.39, while the Nasdaq Composite slid 0.33% to 15,605.48. The Federal Reserve held interest rates steady at their highest level in two decades and acknowledged recent inflation setbacks, extending a waitand-see posture that could last well into the year. In their policy statement released overnight, officials highlighted a “lack of further progress” toward bringing inflation down in recent months. But Fed Chair Jerome Powell said at a news conference that he didn’t think it was likely the Fed would need to consider interest-rate increases, and he volunteered that rate cuts could begin if the labor market weakened unexpectedly.

In economic news, data showed U.S. labor costs rose by a more-than-expected 1.2% last quarter, indicating an uptick in wage pressures. A survey also found that U.S. consumer confidence worsened in April, dropping to its lowest level in more than 1-1/2 years. Corporate earnings were in focus for investors, as well. Disappointing results from chipmaker AMD and server maker Super Micro Computer took the shine off hopes for an AI-fueled boost to the sector. AMD shares sank nearly 10% while Super Micro fell 14%. The news weighed more broadly on chipmakers like Nvidia, which closed down about 4%.

Source: TA Research - 2 May 2024