Range Bound Pending Fresh Local Catalyst

The local market staged a mild rebound on Thursday, encouraged by the congressional testimony by Federal Reserve Chairman that US interest rates will likely be reduced this year if inflation slows further. The FBM KLCI gained 4.32 points to close at 1,535.83, off an opening low of 1,531.7 and high of 1,539.6, as gainers led losers 546 to 452 on steady turnover of 3.55bn shares worth RM2.6bn.

Supports at 1,527/1,513; Resistance at 1,559/1,580

Stocks should end within recent trading ranges ahead of the weekend, barring fresh local catalysts which is key to lift the market from current consolidation. Stronger index supports cushioning downside on further profit-taking pullbacks will be at 1,527, 1,513 and 1,490, the respective 30-day, 50-day and 100-day moving averages. Immediate resistance will be from the recent 21-month high of 1,559, followed by 1,580, with stronger upside hurdle seen at the 1,600 level.

Bargain Supermax & Top Glove

Supermax appear attractive to bargain at current levels, with downside cushioned by chart supports at 80sen and 75sen, while a rebound above the 100-day ma (90sen) will be key to sustain further upside towards 95sen and RM1.04 prior to profit-taking correction. Any further dip on Top Glove towards better supports at 75sen/70sen should attract buyers looking for rebound upside, with a climb above the 100-day ma (85sen) to aim for 94sen and RM1.02 going forward.

Asian Markets Mixed as Traders Digest Fed Chair Speech

Asian markets were mixed on Thursday as traders digested Fed Chair Jerome Powell's speech for rate direction. Powell said it will likely be appropriate for the Fed to begin lowering interest rates at "some point this year," although he reiterated officials need "greater confidence" inflation is moving sustainably toward 2%. The Fed Chief described the economic outlook as "uncertain" and said progress towards the Fed's 2% inflation objective is "not assured." He added, "At the same time, reducing policy restraint too late or too little could unduly weaken economic activity and employment. Powell is due to deliver his second day of testimony on Capitol Hill on late Thursday.

Meanwhile, China’s central bank chief told reporters Wednesday there’s still room to cut banks’ reserve requirement ratio, a form of monetary easing, while the nation’s new top securities regulator warned that authorities will move to fix “market failures” in extreme cases. Japan’s Nikkei 225 dropped 1.23% to 39,598.71, while the broad-based Topix fell 0.42% to 2,719.12. In Australia, the S&P/ASX 200 gained 0.39% to 7,763.70, and the Shanghai composite fell 0.41% to 3,027.40. In South Korea, the Kospi rose 0.23% to end at 2,647.62, while the small-cap Kosdaq fell 0.84% to 863.37.

Wall Street Rises as Fed Strike Dovish Tone

Wall Street's three main indexes ended higher overnight, buoyed by comments from Federal Reserve Chair Jerome Powell to the U.S. Congress that the central bank is likely to begin cutting interest rates later this year. The Dow Jones Industrial Average gained 0.34% to 38,791.35. The S&P rose 1.03% to 5,157.36, while the Nasdaq Composite jumped 1.51% to 16,273.38. Powell also repeated his view overnight that the Fed is looking for greater confidence that inflation is nearing its 2% target. Adding to the optimism, the European Central Bank lowered its annual inflation forecast while announcing its widely expected decision to leave rates unchanged. European Central Bank President Christine Lagarde also indicated officials may be in a position to ease policy in June.

In U.S. economic news, the Labor Department released a report showing first-time claims for U.S. unemployment benefits came in unchanged from an upwardly revised level in the week ended March 2nd. Traders are also awaiting Friday’s U.S. jobs report for insights into the state of the labour market and is expected to show some signs of cooling after a robust month of job gains shocked Wall Street last month. Information technology and communication services stocks led the S&P 500 to that record. Intel was the best performer in the Dow with a gain of more than 3%.

Source: TA Research - 8 Mar 2024