Further Fall Amid Rising US Bond Yields

The local benchmark fell into profit-taking correction on Wednesday, with selloffs led by the healthcare, technology, consumer products and energy sectors as higher-than-expected U.S. job openings solidified expectations of further inflation and slower pace for rate cuts by the U.S. Federal Reserve. The FBM KLCI fell 14.96 points, off an early high of 1,631.15, to close at the day’s low of 1,614.83, as losers swarmed gainers 827 to 285 on total trade of 3.59bn shares worth RM3.06bn.

Resistance at 1,648/1,675; Support at 1,600/1,588

Local and regional markets will likely experience further near-term weakness as investors' risk appetite continues to shrink due to rising U.S bond yields and the state of the Chinese economy. 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 revised downwards to 1,600 with better supports at 1,588, which is the 38.2%FR level, followed by 1,565, the 23.6%FR level, with next crucial support at 1,550.

Bargain Supermax & Top Glove

Further selloff on Supermax towards crucial supports at RM1.10 and RM1.00 should attract bargain hunters looking for rebound upside to RM1.30, with stronger upside hurdles at RM1.45 and RM1.60 ahead. Likewise, Top Glove should attract buyers on weakness for recovery upside towards RM1.40, with RM1.52 and RM1.65 as next upside hurdles, while key chart supports can be found at RM1.20 and RM1.10.

Asian Markets Mixed on U.S Rate-Cut Outlook

Stocks in Asia traded mixed Wednesday as fresh signs of a resilient U.S. economy clouded the outlook for U.S. rate cuts in 2025. U.S. service sector growth picked up in December, a measure of prices paid for inputs rose to near a two-year high, and job openings unexpectedly increased in November, prompting traders to push back their expectations on when the Fed can cut interest rates this year. The Fed in December projected just two rate cuts for 2025, lower than the four it had earlier predicted. Markets currently priced in even less than that at 38 basis points with the first cut fully priced in for July.

Meanwhile, the European Central Bank on the other hand is expected to make deep rate cuts, with traders pricing in 99 bps of easing this year, even though inflation in the euro zone accelerated in December, data showed on Tuesday. Australia’s S&P/ASX 200 traded 0.77% higher to close at 8,349.10, and South Korea gained 1.16% to 2,521.05. Japan’s Nikkei 225 dipped 0.26% to 39,981.06, while the Topix lost 0.59% to 2,770.00. In mainland, the Shanghai Composite closed nearly unchanged at 3,230.17, while the Hang Seng Index slipped 0.86% to 19,279.84.

Wall Street Subdued Ahead of Fridays Job Data

Wall Street’s main indexes struggled to gain traction overnight as traders refrained from making riskier bets ahead of Friday’s jobs report and assessed the possible upside risks to inflation from the incoming Trump administration's policies. The Dow Jones Industrial Average gained 0.25% to close at 42,635.20. The S&P 500 inched higher by 0.16% to 5,918.25, while the Nasdaq Composite inched lower by 0.06% to 19,478.88. The choppy trading on Wall Street partly reflect uncertainty about the outlook for interest rates following the release of mixed U.S. jobs data. After digesting a slew of economic data this week, traders are now awaiting Friday’s December payrolls report.

Market sentiment was also fragile after a CNN report said Trump was mulling building the new tariff program by using the International Economic Emergency Powers Act, which authorizes a president to manage imports during a national emergency. Meanwhile, minutes released from the Fed’s December meeting reflected that nearly all committee participants found that upside risks to the inflation outlook had increased, adding to traders concerns that there may be less rate cuts than expected this year. Markets will be closed on Thursday for a national day of mourning to mark the death of former President Jimmy Carter.

Source: TA Research - 9 Jan 2025