Sideways Pending Fresh Domestic Catalysts

Bursa Malaysia shares rose moderately on Monday amid hopes the latest US unemployment report will encourage the Federal Reserve to reduce interest rates sometime this year. The FBM KLCI rose 4.85 points to close at 1,544.71, off an early low of 1,540.77 and high of 1,547.48, as gainers led losers 523 to 465 on total trade of 3.65bn shares worth RM2.71bn.

Supports at 1,529/1,515; Resistance at 1,559/1,580

The local market should trade sideways pending fresh domestic catalysts to lift stocks from current consolidation. Stronger index supports cushioning downside will be at 1,529, 1,515 and 1,492, the respective rising 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 Dialog & Hibiscus

Dialog will need to overcome the 61.8%FR (RM2.30) to enhance upside potential towards the 76.4%FR (RM2.44) and 25/1/23 high (RM2.68), while key retracement supports from the 38.2%FR (RM2.06) and 23.6%FR (RM1.91) cushion downside. Hibiscus need sustained strength above the upper Bollinger band (RM2.65) to fuel further upside momentum towards the 50%FR (RM2.73) and 61.8%FR (RM2.98) ahead, with retracement support provided by the 23.6%FR (RM2.28).

Asian Markets Mixed Ahead of U.S. Inflation Data

Asian markets were mixed on Monday, tracking a weak lead-in from Wall Street on Friday as anticipation of key U.S. inflation data kept markets on edge. U.S. job growth accelerated in February, Labor Department data showed Friday, but a rise in the unemployment rate and moderation in wage gains kept on the table an anticipated rate cut in June. Traders will seek more signs of progress on inflation this week for further clarity on whether inflation has eased enough for policymakers to lower borrowing costs in coming months. On economic data, data showed Japan was not, in fact, in recession after economic growth was revised up to an annualized 0.4% for the December quarter.

Reuters reported a growing number of Bank of Japan policymakers are warming to the idea of ending negative rates this month on expectations of hefty pay hikes in this year's annual wage negotiations. The Nikkei 22 closed 2.19% lower at 38,820.49, while the Topix declined 2.2% to 2,666.83. South Korea’s Kospi also slipped 0.77% to end at 2,659.84, while the smallcap Kosdaq rose 0.31% to finish at 875.93. In Australia, the S&P/ASX 200 fell 1.82% to close at 7,704.2, but the Shanghai composite bucked the regional trend by gaining 0.74% to 3,068.46.

Wall Street Mixed as Crucial Economic Data Looms

Stocks on Wall Street closed mixed overnight as traders found little encouragement to keep pushing the stock market higher at the start of a week that will bring the last inflation figures before the Federal Reserve’s decision. The Dow Jones Industrial Average gained 0.12% to finish at 38,769.66. The S&P slipped 0.11% to 5,117.94, while the Nasdaq Composite slid 0.41% to 16,019.27, as technology stocks struggled. The continued weakness on Wall Street came amid uncertainty about the outlook for interest rates ahead of the release of key inflation data in the coming days. The Labor Department is scheduled to release its closely watched report on consumer price inflation in the month of February on late Tuesday. On Thursday, the Labor Department is due to release a separate report on producer price inflation in the month of February.

While the Fed is widely expected to leave rates unchanged at its monetary policy meeting next week, the data could impact expectations regarding when the central bank will eventually lower rates. Information technology stock Super Micro Computer dropped more than 5%, while chipmaker Nvidia fell 2%. Both took a hit as investors question if stocks tied to artificial intelligence have more room to run after monster rallies. Meta also struggled, with the Facebook parent tumbling 4.4%. Outside of tech, pharmaceutical stock Eli Lilly dropped more than 3%.

Source: TA Research - 12 Mar 2024