Positive Catalyst Key to Sustain Breakout

Gains in property, utility and oil & gas heavyweights lifted the local benchmark index to close at a fresh 17-month high above 1,500 on Wednesday. The FBM KLCI climbed 7.99 points to end near session highs at 1,504.10, off an opening low of 1,497.16, as gainers led losers 690 to 360 on lower turnover of 4.34bn shares worth RM2.87bn.

Next Hurdles at 1,520/1,550; Key Support at 1,478/1,469

While blue chips look set for further recovery, a positive catalyst will be key for a decisive break from current consolidation to sustain above the 1,500 level. Hence, a convincing break above the 1,500/1,510 resistance zone, which capped upside in Jan 2023, should aim for next key hurdles at 1,520 and 1,550. Key chart supports cushioning downside will be at 1,478, 1,469 and 1,458, the respective 30-day, 50-day and 100-day moving averages.

Bargain Sime Darby & TM

Sime Darby need to climb above the 161.8%FP (RM2.57) to sustain further rise towards the 176.4%FP (RM2.64) and 200%FP (RM2.76) ahead, with the rising 50-day ma (RM2.40) providing uptrend support. TM shares need breakout confirmation above the 123.6%FP (RM6.14) to extend uptrend and target the 138.2%FP (RM6.34) and 150%FP (RM6.50) going forward, while the rising 30-day ma (RM5.64) provide uptrend support and cushions downside.

Asian Markets Buoyed by China Optimism

China and Hong Kong stocks led gains in Asian markets Thursday after China announced fresh stimulus in a bid to boost the country's struggling economy. The People’s Bank of China announced that it would reduce the amount of funds its banks are required to hold as reserves early next month in a bid to boost its struggling economy. Authorities also said they would unveil more support policies soon. Property stocks jumped on the central bank’s measures that would help boost the liquidity available to developers. Later Thursday, focus will shift to the European Central Bank. While policy makers are expected to keep rates on hold this week, attention will be on clues for the path forward. US data this week will be closely scrutinized, with dealers hoping for a fresh handle on the Fed's rate plans.

On economic news, South Korea’s GDP grew 2.2% year on year in the fourth quarter and 0.6% compared with the previous quarter, beating expectations from a Reuters poll of 2.1% and 0.5%, respectively. The Shanghai composite index jumped more than 3% to 2,906.11, while Hong Kong’s Hang Seng index rose 1.96% to 16,211.96. Japan’s Nikkei 225 closed flat at 36,236.47 and the broad based Topix ended 0.11% higher at 2,531.92, while South Korea’s Kospi held flat at 2,470.34 and the small-cap Kosdaq shed 1.49% to close at 823.74. In Australia, the S&P/ASX 200 closed 0.48% higher at 7,555.40

Source: TA Research - 26 Jan 2024