Potential Monetary Easing in China to Lift Markets

Stocks remained in profit-taking correction mode on Monday, amid persistent foreign selling as the prospect of fewer rate cuts by the Federal Reserve is shoring up the dollar, encouraging capital inflows to the US. The FBM KLCI dipped 3.99 points to close at 1,625.47, off an early high of 1,631.71 and low of 1,623.64, as losers edged gainers 577 to 503 on higher turnover of 3.48bn shares worth RM2.66bn.

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

Looking ahead, local and regional markets should be buoyed by PBOC’s announcement that it will implement a moderately loose monetary policy in 2025. Immediate index resistance remains at 1,648, followed by the September peak of 1,675 with tougher resistance seen at the 1,684 high (29 Aug). Immediate support is retained at 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 CelcomDigi & Maxis

CelcomDigi requires sustained strength above the 61.8%FR (RM3.81) to reinforce upside momentum and aim for the 76.4%FR (RM4.01) and RM4.20 ahead, with the 100-day ma (RM3.57) and 38.2%FR (RM3.48) to cushion downside. Maxis will need to climb above the 61.8%FR (RM3.72) to boost bullish momentum and target the 76.4%FR (RM3.93) and RM4.10 going forward, while the 50%FR (RM3.54) and 38.2%FR (RM3.38) provide crucial chart supports.

Asian Markets Weaken as Traders Assess Economic Data

Stocks in Asia weakened on Monday as traders assessed business activity figures from several key economies in the region. China's services activity expanded at the fastest pace in seven months in December, driven by a surge in domestic demand, but orders from abroad declined, reflecting growing trade risks to the economy, a private sector survey showed on Monday. Separately, Hong Kong’s PMI declined in December compared to the month before, while Japan's service activity expanded for a second straight month in December, buoyed by solid demand and business expansion.

The star of the U.S. line up is the December payrolls report on Friday, where analysts expect a rise of 150,000 with unemployment rate holding at 4.2%. Inflation figures from the EU and Germany this week will also refine the outlook for more rate cuts from the European Central Bank. Japan’s benchmark Nikkei 225 dropped 1.47% to 39,307.05, while the broad-based Topix fell 1.03% to 2,756.28. Australia’s S&P/ASX 200 closed nearly unchanged at 8,257.40 and South Korea’s Kospi gained 1.91% to 2,488.63. In mainland, the Shanghai Composite slipped 0.14% to 3,206.92, while the Hang Seng Index fell 0.36% to 19,688.29.

Nasdaq, S&P500 Climb as Chipmaker Soar

Nasdaq and S&P 500 rose overnight, boosted by a rally in semiconductor stocks and traders awaited the release of key monthly jobs data later this week. The S&P 500 gained 0.55% to 5,975.38, while the Nasdaq Composite jumped 1.24% to 19,864.98. The Dow Jones Industrial Average slipped 0.06% to close at 42,706.56. Chip stocks were among the big winners of the session after a record revenue and a strong sales forecast from Nvidia server partner Foxconn, which boosted optimism for AI-fueled growth. Shares of Nvidia climbed more than 3%, while peer Micron Technology rose over 10%.

In a week packed with economic data and speeches from U.S. Federal Reserve officials, investors will look for clues on the pace of monetary policy easing this year. Later in the week, the focus will be on a monthly payrolls report. Meanwhile, leading up to Trump's Jan. 20 inauguration traders are seeking insights into his policies, which are broadly seen as beneficial for corporate America as well as the U.S. economy. Markets will be shut on Thursday for a national day of mourning to mark the death of former President Jimmy Carter.

Source: TA Research - 7 Jan 2025