US Rate Cut Uncertainty to Force Consolidation

Stocks ended mixed on Wednesday as profit-taking interest increased following mixed cues from US Federal Reserve officials that implied interest rate cuts this year may not be a done deal. The FBM KLCI eased 0.93 points to close at 1,604.75, off an early high of 1,610.25 and low of 1,602.29, as losers narrowly edged gainers 571 to 568 on robust trade totaling 5.39bn shares worth RM3.57bn.

Resistance at 1,620/1,640; Supports at 1,565/1,553

Uncertainty over the potential for US interest rate cuts by this year-end should force stocks to fall back for profit-taking consolidation as investors reassess the global growth and inflation outlook. Immediate resistance for the index is retained at 1,620, with stronger upside hurdles seen at 1,640 and then 1,660. Key supports will be at 1,565, 1,553 and 1,528, the respective rising 30-day, 50-day and 100-day moving averages.

Bargain Maybank & RHB Bank

Maybank need breakout confirmation above the 24/4/24 high (RM9.88) to extend uptrend and aim for the 123.6%FP (RM10.26) and 138.2%FP (RM10.50) going forward, while uptrend support from the steadily rising 100-day ma (RM9.40) cushions downside. RHB Bank will need to overcome the 200-day ma (RM5.59) to aid recovery towards the 38.2%FR (RM5.68) and 50%FR (RM5.80) ahead, while the pivot low of 2/6/23 (RM5.29) limits downside risk.

Asian Markets Mixed as Rate-Cut Jitters Weigh

Stocks in Asia ended mixed on Wednesday, as traders assessed mixed signals from U.S. policymakers and digest corporate earnings from the region. Minneapolis Federal Reserve President Neel Kashkari suggested interest rates may need to remain at current levels for an "extended period." He added that he could not rule out the Fed once again raising rates, calling the bar for hiking rates "quite high" but "not infinite.” On earnings front, shares of Japanese video game company Nintendo slipped almost 4% after the company announced its fourth-quarter results. Meanwhile, Singapore’s United Overseas Bank posted a first-quarter net profit of SGD1.47 billion, a 2% fall compared to the same period last year.

Traders will also brace for key economic data out of China and Japan on Thursday, with China releasing its April trade data and Japan announcing its March pay statistics. Australia’s S&P/ASX 200 inched up 0.14% to finish at 7,804.50. The Kospi climbed 0.39% higher to its highest level in more than a month at 2,745.05, while the small-cap Kosdaq gained 0.13% to 872.42. Japan’s Nikkei 225 dropped 1.63% to 38,207.37, while the broad-based Topix fell 1.45% to 2,706.43. The Shanghai composite index also slipped 0.61% to 3,128.48 and Hong Kong’s Hang Seng index fell 0.9% to 18,313.86.

Wall Street Mixed as Traders Seek Fresh Clues on US Rate Path

Major U.S. indexes closed mixed on Wall Street overnight as traders tried to read the ratecut runes and weighed a fresh batch of earnings reports for insight into the chance of a corporate America-spurred revival. The Dow Jones Industrial Average added 0.44% to close at 39,056.39. The S&P 500 ended near the flatline at 5,187.67. The Nasdaq Composite pulled back by 0.18% to end at 16,302.76. The choppy trading on Wall Street came amid lingering uncertainty about the outlook for interest rates and whether inflation is on course to reach the U.S. central bank's 2% target. Traders are also digesting a slew of Federal Reserve commentary. Boston Fed President Susan Collins said in remarks overnight that the Fed’s interest rate policy will likely need to remain at its current level until inflation is moving “sustainably” toward the central bank’s 2% target.

Uncertainty about corporate earnings also gave some traders pause as the season entered its final stretch. While techs have mainly delivered on high expectations, the focus is now on whether other sectors can match up. Uber shares fell 5.7% after the ride-share company posted a surprising net loss and weaker-than-expected bookings revenue, while Intel lost more than 2% after the chipmaker lowered its second-quarter revenue guidance. Amgen and JPMorgan Chase were among the biggest contributors of gains to the Dow, advancing more than 2% each.

Source: TA Research - 9 May 2024