Weak External Sentiment to Spillover

The local market fell on Wednesday, with sentiment dented by waning market momentum across the region as investors weighed chances that the Federal Reserve could delay cutting interest rates in June. The FBM KLCI lost 10.98 points to settle at the day’s low of 1,537.01, off a high of 1,548.42, as losers led gainers 592 to 480 on higher turnover of 4.26bn shares worth RM2.87bn.

Resistance at 1,559/1,580; Support at 1,532/1,497

Lingering concerns about the outlook for interest rates following a recent increase in treasury yields should see stocks retrace further as external sentiment deteriorates. Overhead 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. Immediate index supports stays at 1,532 and 1,497, the respective rising 50-day and 100-day moving averages, with better support seen at 1,480.

Bargain Axiata & CelcomDigi

Axiata looks attractive to bargain for rebound upside towards the 50%FR (RM2.94), with a confirmed breakout to aim for the 61.8%FR (RM3.13) and 76.4%FR (RM3.37) going forward. Crucial support is from the 23.6%FR (RM2.51). Meantime, CelcomDigi needs convincing breakout above the 138.2%FR (RM4.48) to target the 150%FR (RM4.61) and 161.8%FP (RM4.74) ahead, while key retracement supports are from the 76.4%FR (RM3.79) and 61.8%FR (RM3.62).

Asian Markets Slip as Rate Cut Optimism Fade

Stocks in Asian markets ended sharply lower Wednesday as strong US economic data sent Treasury yields higher and renewed concerns over the outlook for interest rates. Treasury yields jumped after U.S. manufacturing data grew for the first time since September 2022 and the personal consumption expenditures index last week was revised higher for January as consumer spending boomed in February. Traders now project fewer rate cuts in 2024 than the central bank itself. In the U.S., a private payrolls report and a services sector survey are the key data risks, along with a speech from Fed Chair Jerome Powell on the economic outlook.

Meanwhile, oil extended a rally after an industry report pointed to a drawdown in US crude inventories, ahead of an OPEC+ meeting at which the group is expected to affirm current supply cuts. In Australia, the S&P/ASX 200 dropped 1.34% to 7,782.50, and the Shanghai composite fell 0.18% to 3,069.50. Japan’s Nikkei 225 fell 0.97% to 39,145.85, while the broad based Topix slipped 0.29% to 2,706.51. South Korea’s Kospi also dropped 1.68% to 2,706.97, and the Hang Seng index fell 1.22% to 16,725.10.

Wall Street Finish Mixed as Traders Parse Fed Chair Comments

Wall Street’s main indexes finished mixed overnight as traders weighed remarks from Fed Chairman Jerome Powell against strong U.S. economic data that suggests the need for higherfor-longer interest rates. The Dow Jones Industrial Average fell 0.11% to close at 39,127.14. The S&P inched higher by 0.11% to close at 5,211.49, while the Nasdaq Composite added 0.23% to 16,277.46. In a speech at Stanford University, Fed Chair Jerome Powell said that the central bank will stick to its wait-and-see approach as it considers when to start cutting rates given the continued strength of the U.S. economy and recent higher-than-expected inflation data.

In separate comments to CNBC, Atlanta Fed President Raphael Bostic said rates should likely not be reduced until the fourth quarter of this year. Traders have scaled back their bets to the point where they expect a smaller, later easing than policymakers have projected. On economic news, ADP data released overnight showed private payrolls grew more than expected in March. It offered another sign of resiliency in the economy as investors grow increasingly concerned about the path of interest rate cuts from the Federal Reserve.

Source: TA Research - 4 Apr 2024