Cautious Ahead of Key U.S. Data

The local market drifted lower for a fourth straight session on Tuesday, in line with the global sell-down of technology stocks as the launch of powerful and less expensive Chinese AI technologies continues to unsettle investors sentiment. The FBM KLCI lost 6.28 points to close at 1,552.69, off an opening high of 1,557.44 and low of 1,544.87, as losers swarmed gainers 537 to 372 on lower turnover totaling 2.19bn shares worth RM2.01bn.

Support at 1,550/1,529; Resistance at 1,605/1,630

Market sentiment is likely to remain muted this week as most investors are away for the Chinese New Year celebration, while the markets await key inflation data and corporate earnings from the U.S. Immediate index support remains at 1,550, with stronger supports at the 6/8/24 low of 1,529 and 1,500 psychological level. Immediate resistance is maintained at 1,605, with next upside hurdles at 1,630, followed by 1648.

Bargain Bumi Armada & Dialog

Any further correction on Bumi Armada shares towards key supports at the 76.4%FR (63sen) or the 61.8%FR (57sen) should attract bargain hunting prior to a technical rebound towards the 07/03/23 peak (73sen) with tougher resistance coming from the 123.6%FP (83sen). Likewise, Dialog shares are poised for recovery, with a confirmed breakout above the 38.2%FR (RM2.01) to enhance upside momentum towards the 50%FR (RM2.12) and 61.8%FR (RM2.24) ahead. Support from the 23.6%FR (RM1.86) and the 23/12/24 low (RM1.76) cushions downside risk.

Asian Markets Climb Despite Hawkish Federal Reserve Rate Decision

Japanese and Australian markets closed higher on Thursday, ignoring declines on Wall Street overnight after the Federal Reserve left interest rates unchanged in its first policy decision of the year. Japanese market heavyweight SoftBank Group shares were down 1.06% following reports that it was is in talks to invest as much as USD25bn into ChatGPT maker OpenAI, making it the company’s biggest financial backer. In economic news, Australia’s export price index climbed 3.6% in the 4Q 2024 but fell 8.6% through the year while its import price index rose 0.2% in the fourth quarter but fell 1.9% through the year.

In Japan, the benchmark Nikkei 225 gained 0.25% to 39,513.97 and the broad-based Topix rose 0.23% to 2,781.93. Australia’s S&P/ASX 200 also rose 0.55% to close at 8,493.70. Meanwhile, markets in mainland China, Hong Kong, Singapore, and South Korea were closed for Chinese New Year holidays.

Wall Street Edges Higher as Traders Digest Big Tech Earnings

Wall Street’s main indexes edged higher in the volatile trading session overnight as traders digested mega cap tech earnings results for more clues on prospects for Big Tech. The Dow Jones Industrial Average gained 0.38% to 44,882.13. The S&P 500 rose 0.53% to 6,071.17, while the Nasdaq Composite added 0.25% to end at 19,681.75. The major averages moved sharply lower late in the session after President Donald Trump said he would follow through on his threat to impose 25 percent tariffs on imports from Canada and Mexico on Saturday, February 1st. However, the major averages rebounded going into the close, reflecting the significant volatility seen throughout the session.

The choppy trading on the day came amid a mixed reaction to earnings news from several big-name companies. The first earnings from the group of so-called "Magnificent Seven" mega cap tech stocks met with a mixed reaction from traders, many of whom are now scrutinizing these companies' AI spending plans in light of the emergence of low-cost Chinese startup DeepSeek. Microsoft beat quarterly revenue estimates, but a downbeat outlook for its cloud computing business pushed its shares down 6%, while Meta forecast first-quarter revenue below market estimates, but pledged to cut costs, lifting its shares by 1.5%.

Source: TA Research - 31 Jan 2025