Range Bound Pending Year-End Window-Dressing Action

Bursa Malaysia shares drifted sideways in listless trade on Tuesday, given the lack of local market leads with most investors away for the weekend Christmas and Boxing Day holidays. The FBM KLCI dipped 3.6 points to end at the day’s low of 1,450.78, off an early high of 1,456.66, as losers edged gainers 426 to 397 on moderate turnover of 2.93bn shares worth RM1.97bn.

Support at 1,450/1,430; Resistance at 1,470/1,500

Stocks should stay range bound pending the eventual return of window-dressing ahead of the year-end to lift the market from present consolidation. As for the index, it will need to hold above the 1,450 immediate support level to prevent further dip toward better supports at 1,440 and 1,430, while 1,400/1,390 should act as stronger support. A convincing breakout above 1,470 will encourage further gain towards the 1,490/1,500 level, where it may end the year as window-dressing activity returns.

Bargain Axiata & CelcomDigi

Axiata need to overcome the upper Bollinger band (RM2.47) to enhance upside momentum towards the 200-day ma (RM2.61) and tougher hurdle from the 38.2%FR (RM2.82), while key chart supports are at the lower Bollinger band (RM2.26) and 31/10/23 low (RM2.16). CelcomDigi needs a breakout confirmation above the 200-day ma (RM4.24) to fuel further upside towards the 123.6%FP (RM4.35) and 138.2%FP (RM4.52) ahead, with downside cushioned by the lower Bollinger band (RM4.01).

Selected Asian Markets Climb as US Rate Cut Bet Rise

Japan and South Korea markets started the last trading week of 2023 on a positive note with the Nikkei 225 all set to emerge as the region’s top performer this year, but China stocks continued to slide. Australia, New Zealand and Hong Kong markets were closed for Boxing Day holiday. Japan’s Nikkei 225 rose 0.16% to close at 33,305.85. It has gained more than 27% so far this year. China’s CSI 300 index closed 0.68% lower at 3,324.79, dragged down by declines in technology and real estate stocks. The index has lost over 14% this year. South Korea’s Kospi climbed 0.12% to 2,602.59.

Stock investors have cheered recent signs from the US Federal Reserve on the outlook for interest rates. At the conclusion of its policy meeting on Dec. 13, the Fed signalled that it had reached the end of its tightening cycle and opened the door to interest rate cuts in the coming year. Markets are now pricing in a 75% chance of a 25 basis points rate cut from the Fed in March, according to the CME FedWatch tool, compared with a 21% chance at the end of November. Markets are also pricing in more than 150 basis points of rate cuts next year.

Wall Street Crept Higher on Rate Cut Bets

US stocks crept higher overnight as investors held fast to bets that cooling U.S. inflation will lead the Federal Reserve to cut interest rates next year. Oil prices jumped over 3% to the highest in almost a month, as Middle East tensions continue and investor hope possible rate cuts will boost global economic growth and fuel demand. Trading was thin on the day after Christmas with several markets, including those in Australia, Hong Kong, Britain and Germany, closed for Boxing Day. On Wall Street, the Dow Jones Industrial Average rose 0.43%, the S&P 500 gained 0.42%, and the Nasdaq Composite added 0.54%. In a sign the U.S. economy was holding up, a report by Mastercard showed U.S. retail sales rose 3.1% between Nov. 1 and Dec. 24, lower than last year's 7.6% gain. Investors were still digesting data released on Friday that showed U.S. prices fell in November for the first time in more than 3-1/2 years, underscoring the economy's durability. Inflation, as measured by the personal consumption expenditures (PCE) price index, fell 0.1% last month.

Wall Street came into the holiday-shortened week with momentum, after the S&P 500 on Friday registered its eighth straight weekly advance and longest streak since 2017. The Dow and Nasdaq Composite also notched an eight-week winning streak. Those moves come as investors cheer recent data showing inflation is moving closer toward the Federal Reserve’s 2% target. Expectations of potential rate cuts in the new year have also lifted equities in recent weeks. In other news, Intel jumped 5.2% after Israel’s government gave the chipmaker a USD3.2 billion grant for a USD25 billion plant in the country’s south. Manchester United added 3.4% after British billionaire Jim Ratcliffe finalized a deal to buy a quarter of the soccer club.

Source: TA Research - 27 Dec 2023