Higher US Inflation to Force Profit-Taking Consolidation

Profit-taking in plantation, telco and consumer heavyweights dragged down the blue-chip index for double-digit losses Wednesday, but the broader market extended consolidation amid lacking leads. The FBM KLCI shed 16.43 points to end at 1,538.13, off an early high of 1,544.74 and low of 1,536.76, but gainers led losers 519 to 478 on steady trade totalling 4.17bn shares worth RM2.73bn.

Supports at 1,531/1,518; Resistance at 1,559/1,580

Stocks should ease into consolidation after recent gains encourage profit-taking, with the higher-then-expected inflation data forcing the market to reassess the timeline for US interest rate cuts. Stronger index supports cushioning downside will be at 1,531, 1,518 and 1,494, 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 Aemulus & Inari

Aemulus will need breakout confirmation above the upper Bollinger band (36sen) to extend recovery towards the 38.2%FR (41sen) and 50%FR (47sen) ahead, while downside is cushioned by the 100-day ma (30sen). Inari need sustained strength above the 61.8%FR (RM3.28) to renew upside momentum towards the 76.4%FR (RM3.55), with next hurdles from RM3.85 and the 22/11/221 high (RM4.00), while the 200-day ma (RM2.93) should limit downside risk.

Asian Markets Mixed as Traders Parse U.S. Inflation Report

Stocks in Asia struggled to find momentum on Wednesday as traders digested the hotterthan-expected U.S. inflation report. Overnight data showed U.S. consumer prices increased a solid 0.36% in February against expectations for a 0.3% rise, amid higher costs for fuel and shelter, though on an annual basis core CPI slowed slightly to 3.8%. The Fed is widely expected to hold interest rates steady for a fifth straight meeting when policymakers gather March 19- 20. Much of the focus by traders will be on the Federal Open Market Committee’s quarterly forecasts for rates, including whether fresh employment and inflation figures have prompted any changes.

On economic front, South Korea’s unemployment rate came in at a seasonally adjusted rate of 2.6% year over year in February, according to official data. Japan’s Nikkei 225 reversed gains to fall 0.26%, closing at 38,695.97 and the broad-based Topix dropped 0.33% to 2,648.51. South Korea’s Kospi climbed 0.44% to 2,693.57, while the small-cap Kosdaq ended marginally up at 889.93, snapping three days of gains. In Australia, the S&P/ASX 200 rose 0.22% at 7,729.40, while the Shanghai composite fell 0.40% to 3,043.83.

Wall Street Subdued as Traders Await More Economic Data

Wall Street’s main indexes struggled for direction overnight as traders braced for economic data for further clues on inflation ahead of next week's Federal Reserve meeting. The Dow Jones Industrial Average inched up by 0.10%, to finish the session at 39,043.32. The S&P slipped 0.19% to close at 5,165.31, while the Nasdaq Composite lost 0.54% to 16,177.77. Trading activity remained somewhat subdued as traders remained on the sidelines ahead of the release of several key reports in the coming days. Traders will get another round of inflation data in the form of the U.S. producer price index on late Thursday, along with data on consumer spending and the labour market, before next week's Fed policy meeting.

High-flying Nvidia fell more than 1%, while Tesla fell over 4.5% after a Wells Fargo downgrade and sales warning. Intel also shares fell, with Bloomberg reporting that the Pentagon had pulled out of a plan to spend as much as USD2.5 billion on a chip grant to the company. Shares of Meta Platforms slipped 0.8%, and Apple fell about 1.2%. The VanEck Semiconductor ETF slid roughly 2% for its third losing session in four. The information technology sector also slipped about 1.1%.

Source: TA Research - 14 Mar 2024