Cautious Trade in the New Year on Trump Policy Impact

The local blue-chip benchmark extended gains to end 2024 on a positive note Tuesday, spurred by late bargain-hunting on the last trading session of the year with the transport, property and consumer products sectors leading gains. The FBM KLCI added 4.65 points to settle at 1,642.33, off an early low of 1,632.85 and high of 1,644.54, but losers edged gainers 515 to 485 on lower turnover of 2.37bn shares worth RM2.06bn.

Resistance at 1,648/1,675; Support at 1,620/1,600

Market sentiment will likely stay cautious as trading began for the new year due to investors’ uncertainty over the incoming Trump administration’s policies and its potential inflationary impact. Immediate index resistance is upgraded to 1,648, followed by the September peak of 1,675 with tougher resistance seen at the 1,684 high (29 Aug). Immediate support is revised upwards to 1,620, with better supports at 1,600 and 1,588, which is the 38.2%FR level, with next crucial support at 1,565, the 23.6%FR level, followed by the key 1,550 support.

Bargain Dialog & Hibiscus

Dialog shares will need a confirmed breakout above the 38.2%FR (RM2.01) to extend uptrend momentum towards the 50%FR (RM2.13) and target the 61.8%FR (RM2.24) going forward. Uptrend support from the lower Bollinger band (RM1.76) and the 17/10/22 low (RM1.63) limits downside risk. Positive technical momentum should lift Hibiscus shares towards the 76.4%FR (RM2.07), with a convincing breakout to aim for the 61.8%FR (RM2.22), with next resistance seen at the 50%FR (RM2.33), while key chart supports at the 11/09/24 pivot low (RM1.84) and RM1.71 cap downside.

Asian Markets Subdued on Weak China Data

Asian markets were largely subdued on the last trading day of the year Tuesday, after China’s manufacturing growth missed expectations. China’s purchasing managers’ index for December came in at 50.1, missing expectations, signaling that Beijing’s stimulus measures were not sufficient to meaningfully boost the country’s ailing economy. Volumes were light with a holiday for the New Year looming and Japan on holiday for the rest of the week, with the Santa-rally losing some steam as elevated Treasury yields weigh on high equity valuations and boost the greenback.

Indication of uncertainties are also facing investors in 2025, ranging from President-elect Donald Trump’s protectionist policies to the Federal Reserve’s outlook and the health of China’s economy. Australia’s S&P/ASX 200 dropped 0.92% to 8,159.10. In mainland, the Shanghai Composite dropped 1.49% to 3,357.64, while the Hang Seng Index ended a shortened trading day marginally higher at 20,059.95. Japan and South Korea’s stock markets are closed for the New Year’s Eve holiday

Wall Street Dips Amid Year End Profit-taking

Wall Street’s major indexes fell on Tuesday, as some traders cashed in on this year's strong gains. The Dow Jones Industrial Average fell 0.07% to close at 42,544.22. The S&P 500 slipped 0.43% to 5,881.63, while the Nasdaq Composite lost 0.9% to end at 19,310.79. Market activity was subdued on the last trading session of the year, with semiconductor and software stocks leading declines which weighed on the tech-heavy Nasdaq, while oil producer stocks rose in line the price of crude oil.

However, the major averages made gains over the year, fueled by the ongoing interest in the artificial-intelligence sector and the U.S. Federal Reserve's first interest rate cuts in three-anda-half years. In 2024, the Dow added 12.88%, while the Nasdaq gained 28.64%. Similarly, S&P 500 rose by 23.31% in 2024. Looking ahead to 2025, traders will likely be pricing in the uncertainties surrounding the tax and tariff policies of the incoming Trump administration before making any significant bets.

Source: TA Research - 2 Jan 2025