Sideways Pending Key Interest Rate Decisions

Bursa Malaysia shares slid on Monday, as investors assessed China's inflation data which pointed to further economic weakness, underlining the need for more drastic policy stimulus. The FBM KLCI eased off 1.82 points to end at the day’s high of 1,611.43, off an early low of 1,602.94, as losers beat gainers 662 to 433 on modest turnover totaling 3.02bn shares worth RM2.4bn.

Resistance at 1,628/1,648; Support at 1,588/1,565

Investors will likely remain sidelined as they await a slew of interest rate announcements from key central banks across the globe this week, along with any stimulus measures from Beijing's Central Economic Work Conference. Immediate index resistance remains at 1,628, 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.

Sell on Rally Supermax and Top Glove

Supermax should pullback for profit-taking correction from the recent rally, with key chart supports at 89sen, 80sen, and 70sen cushioning downside, while upside is seen capped at RM1.10 and RM1.20. Similarly, profit-taking interest should cap a further rally on Top Glove, given overbought momentum and significant resistance capping upside near RM1.40 and RM1.50, while crucial support at RM1.10 and RM1.00 limits downside.

Asian Markets Mixed on Global Political Tumult

Stocks in Asia ended mixed Monday, as traders grappled with South Korea’s political upheaval and assessed economic data from the region. Korea remains a focus in the region after President Yoon Suk Yeol survived an impeachment vote over the weekend as the fallout from his brief declaration of martial law continues to roil the country. Political tumult in South Korea was also joined by the fall of Syrian President Bashar al-Assad's regime, which complicated an already fraught situation in the Middle East. On economic news, China’s consumer price growth missed expectations in November, rising by 0.2% year on year, down from a 0.3% increase in October, according to the National Bureau of Statistics on Monday.

Separately, Japan’s third-quarter GDP was revised to 0.3% on a quarter-on-quarter basis, up from 0.2% and above estimates from a Reuters poll that predicted no change. South Korea’s Kospi dropped 2.78% to 2,360.58, while Australia’s S&P/ASX 200 traded flat to end the day at 8,423.00. Japan’s Nikkei 225 gained 0.18% to 39,160.50 and the broad-based Topix added 0.27% to 2,734.56. In mainland, the Shanghai Composite ended nearly unchanged at 3,402.53, while Hong Kong’s Hang Seng jumped 2.76% to 20,414.09.

Tech Stocks Drag Wall Street Lower

Wall Street’s major indexes slipped overnight, with tech shares struggling, while traders awaited key data that will help shape the outlook for Federal Reserve rates. The Dow Jones Industrial Average fell 0.54% to close at 44,401.93. The S&P 500 slipped 0.61% to 6,052.85, while the Nasdaq Composite lost 0.62% to 19,736.69. Nvidia Corp. slid as China opened a probe over suspicions the giant US chipmaker broke anti-monopoly laws around a 2020 deal. Other tech stocks like Tesla, Meta Platforms and Netflix also struggled.

Meanwhile, data including Wednesday’s consumer price index will offer Fed officials a final look at the pricing environment ahead of their meeting the following week. Any indication that progress has stalled on the inflation front could well undercut the chances of a third straight reduction in rates. Several Fed officials, including Chair Jerome Powell, emphasized caution regarding the central bank's approach to easing monetary policy due to the economy's resilience.

Source: TA Research - 10 Dec 2024