Sideways as Market Await Key Inflation Data

Blue chips on Bursa Malaysia stayed range bound on Monday, with investors mostly sidelined awaiting stronger cues from global central banks guidance and upcoming key US inflation data for market direction. The FBM KLCI slipped 4.85 points to close at 1,537.54, off an opening high of 1,540.23 and low of 1,532.73, as losers beat gainers 587 to 476 on total turnover of 3.76bn shares worth RM2.55bn.

Supports at 1,525/1,501; Resistance at 1,599/1,580

Sideways trade should persist near-term as investors await clearer guidance on the likely inflation and interest rate trend from key global central bankers. Stronger index supports cushioning downside will be at 1,525 and 1,501, the respective rising 50-day and 100-day moving averages, with better support seen at 1,480. Immediate resistance remains at the recent 21-month high of 1,559, followed by 1,580, with stronger upside hurdle seen at the 1,600 level.

Bargain Bumi Armada & Velesto

Bumi Armada will need breakout confirmation above the 76.4%FR (63sen) to extend rise and challenge the 7/3/23 peak (73sen), with next major hurdle at the 123.6%FP (82sen), and key retracement supports at the 50%FR (52sen) and 38.2%FR (47sen). Likewise, Velesto need sustained strength above the 28/2/24 high (31.5sen) to extend uptrend and aim for the 123.6%FP (37sen) and 138.2%FP (40sen) going forward, with key chart supports from the 76.4%FR (26sen) and 61.8%FR (22sen) cushioning downside.

Asian Markets Stall on US Inflation Watch

Asian markets stalled on Monday as investors worried U.S. inflation data this week could derail the outlook for lower interest rates, while the risk of currency intervention from Japan stalled the yen's decline for the moment. China's central bank also engineered a rally in the yuan after setting a firmer fix for the currency, nudging the dollar lower more broadly. The main data event of the week will be U.S. core personal consumption expenditure (PCE) price index on Friday which is seen rising 0.3% in February, keeping the annual pace at 2.8%. Anything higher would be taken as a setback to hopes for a Federal Reserve rate cut in June. While the Fed sounded dovish last week, it was hardly alone, with the Swiss central bank (SNB) actually cutting rates while the Bank of England (BoE) and European Central Bank (ECB) left markets looking for easings from June onwards.

Hong Kong’s Hang Seng index was slightly below the flatline at the end of trading, while the mainland China’s CSI 300 index ended the day 0.54% lower at 3,525.76, marking its third straight day of losses. Japan’s Nikkei 225 closed 1.16% lower at 40,414.12, retreating from its all-time high on Friday, while the broad-based Topix closed down 1.26% at 2,777.64. South Korea’s Kospi dipped 0.4% to 2,737.57, after opening higher and coming close to two-year highs. The small-cap Kosdaq gained 1.07% and finished at 913.69. In Australia, the S&P/ASX 200 rose 0.53% and closed at 7,811.9, rebounding from Friday’s losses and edging close to record highs.

Wall Street Ends Lower Ahead of Key Data

U.S. stocks lost ground at the start of a holiday-shortened week on Monday as investors positioned themselves ahead of key inflation data. The Dow Jones Industrial Average fell 162.26 points, or 0.41%, closing at 39,313.64. The S&P 500 dipped 0.31% to finish at 5,218.19, while the Nasdaq Composite was down 0.27% and settled at 16,384.47. The dollar dipped as the risk of yen intervention loomed and it came under pressure from China's governmentsupported yuan rally. Wall Street focused on Boeing, after the planemaker said its CEO Dave Calhoun will step down by year-end after a flurry of safety concerns.

After the U.S. Federal Reserve's decision last Wednesday to leave its key policy rate unchanged, and its "dot plot" still reflecting expectations for three cuts this year, markets are looking ahead to Friday's Personal Consumption Expenditures (PCE) report due from the Commerce Department. The report will be released on the Good Friday holiday despite it being a market holiday. Analysts expect the PCE data to show inflation gathered heat in February, with prices rising by 0.4% after January's 0.3% gain. However, "core" price inflation, which strips away volatile food and energy prices, is seen cooling to 0.3% from 0.4%.

Source: TA Research - 26 Mar 2024