Cautious on US Tariff Threat

The local benchmark index extended gains on Tuesday spurred by bargain hunting interest in key utilities, health care, and consumer products heavyweights. The FBM KLCI added 5.7 points to settle at 1,603.15, off an early low of 1,596.03 and high of 1,607.76, but losers beat gainers 584 to 412 on slower trade of 2.54bn shares worth RM2.37bn.

Resistance at 1,630/1,648; Support at 1,588/1,565

Market sentiment could turn cautious in line with regional markets due to rising global trade tensions following Donald Trump’s threat to impose tariffs on the United States' three largest trading partners Canada, Mexico and China. Immediate index resistance remains at 1,630, next 1,648, followed by the September peak of 1,675. Immediate support stays at 1,588, the 38.2%FR of the 1,529 low (6 Aug) to 1,684 high (29 Aug) rally, with stronger key supports at 1,565, the 23.6%FR level, and then 1,550.

Bargain Gamuda & UEM Sunrise

Gamuda needs convincing strength above the 123.6%FP (RM9.41) to enhance upside momentum towards the 138.2%FP (RM10.02) and 150%FP (RM10.52) ahead, while key uptrend supports at the middle Bollinger band (RM8.81) and the 100%FP (RM8.42) cushions downside. Meanwhile, further dips on UEM Sunrise towards the 61.8%FR (88sen) would be attractive to bargain for potential rebound towards the 200-day ma (RM1.05), with next hurdle seen at RM1.20 and 20/05/24 high (RM1.28). A stronger retracement support level is seen at the 50%FR (76sen).

Asian Markets Fall on Trump’s Tariff Threat

Asian markets slipped on Tuesday after President-elect Donald Trump said the US will impose additional tariffs on China as well as Mexico and Canada, ratcheting up concerns about his America First policies. U.S. President-elect Donald Trump said on his first day in office he will impose additional 10% tariff on goods from China and 25% tariff on all products from Mexico and Canada. Trump claimed China had failed to follow through on promises to crack down on drugs, and the levies on Mexico and Canada were needed to clamp down on migrants and illegal drugs flowing into the US. Mexico is the largest trading partner of the U.S., followed by Canada and China, according to U.S. data as of September.

Traders also seemed reluctant to make more significant moves ahead to the release of key U.S. economic data later in the week, including readings on consumer price inflation preferred by the US Fed. Japan’s Nikkei 225 fell 0.87% to 38,442.00, while the broad-based Topix lost 0.96% to 2,689.55. Australia’s S&P/ASX 200 fell 0.69% to close at 8,359.40 and South Korea’s Kospi dropped 0.55% to close at 2,520.36. In mainland, the Shanghai Composite also slipped 0.14% to 3,259.16, but Hong Kong’s Hang Seng Index edged up 0.04% to 19,159.20.

Wall Street Shrugs Off Trump Tariff Risks

Wall Street’s major indexes closed higher after choppy trading overnight as traders looked past Donald Trump’s plan to impose additional tariffs on the US’s top trading partners. The Dow Jones Industrial Average rose 0.28% to close at 43,860.31. The S&P 500 gained 0.57% to 6,021.63, while the Nasdaq Composite added 0.63% to 19,174.30. Markets were initially caught off guard by Trump's pledge to slap big tariffs on the US's biggest trading partners on his first day in office. Traders are weighing whether his latest threat will become policy or is just an opening point for negotiations. For now, the market seems to be taking it more as the latter.

Outside of possible tariffs, traders also digested the release of the minutes from the Federal Open Market Committee meeting ended Nov. 7, which showed officials prefer a gradual pace of interest rate cuts if the economy remains on solid footing. The index had been under pressure for most of the day after drug maker Amgen tumbled as much as 12% on weightloss data that failed to impress Wall Street. Oil prices settled lower giving back early gains in choppy trade after Israel agreed to a ceasefire deal with Lebanon, reducing oil’s risk premium.

Source: TA Research - 27 Nov 2024