Global Rate Cut Optimism to Spillover

Stocks rose on bargain hunting interest Tuesday, lifted by optimism further interest rate cuts by key global central bankers would encourage more foreign fund flows into the domestic market. The FBM KLCI gained 5.07 points to close at 1,670.37, off an early low of 1,665.51 and high of 1,671.47, as gainers edged losers 558 to 549 on improved turnover totalling 3.51bn shares worth RM3.1bn.

Key Resistance at 1,674/1,684; Supports at 1,650/1,633

Optimism over China’s fresh measures to cut interest rates to stimulate growth and cues for further significant rate cuts by US Federal Reserve officials should spillover to boost local market sentiment. Immediate index resistance will be at the recent high of 1,674, followed by the high of 1,684, then 1,695, the Dec 2020 high, as tougher resistance levels. Immediate support will be at 1,650, then the recent correction low of 1,633, with 1,620 and 1,600 acting as stronger supports.

Bargain Hibiscus & Wasco

Hibiscus will need to climb above the 38.2%FR (RM2.25) to expand recovery towards the 50%FR (RM2.37) and 61.8%FR (RM2.49) ahead, with the lower Bollinger band (RM1.97) seen to cushion downside. Wasco need breakout confirmation above the 61.8%FR (RM1.20) to boost upside momentum towards the 76.4%FR (RM1.35) and RM1.45 going forward, while the lower Bollinger band (RM1.05) and 38.2%FR (94sen) will provide key supports cushioning downside.

Asian Markets Advance on China Stimulus Hopes

Stocks in Asia rose on Tuesday after China’s central bank announced stimulus measures in a bid to reach this year’s economic growth target and stem a selloff in the equity market. In an eagerly awaited press conference, China's top financial regulators unveiled a slate of measures, saying it would cut bank reserves by 50 basis points while reducing mortgage rates to try to spur sluggish economic growth. Meanwhile, a handful of US Federal Reserve officials on Sept 23 left open the door to additional large interest rate cuts, noting that current rates still weigh heavily on the US economy. Dr Goolsbee, Atlanta Fed president Raphael Bostic and Minneapolis Fed president Neel Kashkari said that they supported the decision taken by Fed officials last week to lower their benchmark rate by a half percentage point to a range of 4.75% to 5%.

In Australia, Australia’s central bank held its benchmark policy rate at 4.35%, in line with expectations from economists polled by Reuters. Traders are now awaiting data on the Fed’s preferred price metric and US personal spending later this week. The Shanghai Composite jumped 4.15% to 2,863.13, while Hong Kong’s Hang Seng index surged 4.13% to 19,000.56. Japan’s Nikkei 225 also rose 0.57% to 37,940.59 and the Topix gained 0.54% to 2,656.73. South Korea’s blue-chip Kospi also rose 1.14% to 2,631.68, but Australia’s S&P/ASX 200 fell 0.13% to 8,142.00.

Wall Street Tick Higher on Fed Bets, China Optimism

Wall Street’s major indexes ticked higher in choppy trading overnight, as traders continued to digest the Federal Reserve’s decision to start the easing cycle amidst the backdrop of mixed economic data. The Dow Jones Industrial Average rose 0.20% to close at 42,208.22. The S&P 500 gained 0.25% to 5,732.93, while the Nasdaq Composite added 0.56% and ended at 18,074.52. Traders generally are optimistic that the U.S. economy can avoid a recession, despite a recent uptick in the unemployment rate. After the Federal Reserve cut short-term interest rates by a larger-than-normal 0.5 percentage point last week, traders are betting that the central bank will cut rates by the same amount at its next meeting in November. The indexes initially trimmed gains after a report from the Conference Board revealed an unexpected decline in U.S. consumer confidence in September, driven by growing concerns about the labour market's health.

Metal prices also got a boost after the world's second-largest economy, China, unveiled its biggest stimulus since the pandemic to pull the economy out of its deflationary funk. Shares of artificial intelligence darling Nvidia climbed nearly 4% after a regulatory filing showed that CEO Jensen Huang wrapped up his sales of the chipmaker’s stock for the time being. Tesla, Home Depot, Netflix, Salesforce, AMD, Comcast Corporation and Nike gained 1 to 3%. Separately, online retail giants Alibaba, Pinduoduo, and JD.com all rose more than 7% on the day.

Source: TA Research - 25 Sept 2024