Rubber Glove and OG Stocks on Rotational Play

The local market fell back into profit-taking consolidation mode Wednesday, as investors turned cautious after the recent FOMC meeting minutes imply continuing vigilance in keeping interest rates high to tame inflation. The FBM KLCI shed 7.51 points to close at 1,455.89, off an opening high of 1,460.59 and low of 1,454.52, as losers beat gainers 530 to 374 on slower trade totalling 2.97bn shares worth RM2.04bn.

Resistance at 1,465/1,470; Support at 1,450/1,430

Stocks should continue to trade sideways pending fresh local market leads, while rubber glove and oil & gas related stocks continue to attract rotational buying interest amid positive news flow. Immediate index resistance is at 1,465/1,470, with the 1,490/1,500 area acting as tougher upside hurdle, while immediate support stays at 1,450, with 1,430, and then 1,400/1,390 as stronger chart supports.

Bargain Velesto & Wasco

Velesto will be attractive to bargain on weakness for rebound upside to the 50-day ma (25sen), with a confirmed breakout to aim for the Feb high (28.5sen) and 32sen going forward, while downside should be cushioned by the 61.8%FR (20sen). Wasco also looks attractive to bargain on weakness, while a convincing breakout above the 123.6%FP (RM1.03) should target the

138.2%FP (RM1.09) and 150%FP (RM1.14) ahead, with the 200-day ma (90sen) limiting downside risk.

Asian Markets Mixed as Traders Digest Fed Minutes

Asian markets traded mixed on Wednesday, as investors digested the release of the Federal Reserve's latest meeting minutes. Minutes from the Fed's last rate-setting meeting were top of mind, amid a debate over whether the rate-cut optimism that has powered the stock rally is overdone. According to the minutes of the Oct. 30-Nov. 1 meeting released on Tuesday, all FOMC participants "judged that it would be appropriate for policy to remain at a restrictive stance for some time until inflation is clearly moving down sustainably toward the Committee’s objective." Interest rate futures markets see almost no chance the Fed hikes again and price about 90 basis points of rate cuts through 2024, with a 30% chance they begin as soon as March.

On economic news, bellwether Singapore's economy grew faster than initial estimates in the third quarter, helped by a resurgence in tourism. Japan’s Nikkei 225 rebounded from two straight days of losses to rise 0.29% and end at 33,451.83, while the Topix added 0.44% to 2,378.19. In Australia, the S&P/ASX 200 inched down by 0.07% to 7,073.40, and the Shanghai composite index fell 0.79% to 3,043.61. South Korea’s Kospi climbed marginally, marking a third day of gains and closing at 2,511.7. In contrast, the Kosdaq shed 0.29%, ending the day at 814.61.

Wall Street Rises On Peak Rate Bets

Wall Street’s main indexes ended higher overnight as traders were optimistic the Federal Reserve may be done raising interest rates and that the economy is still resilient. The Dow Jones Industrial Average gained 0.53%, to 35,273.03. The S&P 500 climbed 0.41% to 4,556.62, while the Nasdaq Composite advanced 0.46% to 14,265.86. The strength on Wall Street comes as continued optimism about the outlook for interest rates has contributed to renewed buying interest following the pullback on Tuesday. While the minutes of the latest Federal Reserve meeting failed to provide any indications the central bank plans to cut interest rates in the near future, CME Group's Fed-Watch Tool still suggests the next move will be a rate cut in mid-2024.

Stocks may also be benefitting from easing concerns about the conflict in the Middle East after Hamas and Israel agreed to a Qatar-mediated pause in fighting. On the U.S. economic front, the number of Americans filing new claims for unemployment benefits fell more than expected last week. Separately, a survey showed U.S. consumers' inflation expectations rose for a second straight month in November. Meanwhile, U.S. crude prices fall after the Organization of Petroleum Exporting Countries delayed a pivotal meeting on production cuts that was scheduled for the weekend.

Source: TA Research - 23 Nov 2023