External Concerns to Check Gains

Blue chips rallied on Thursday, copying regional strength after Jerome Powell reaffirmed his view that the Federal Reserve will likely cut interest rates this year. The FBM KLCI gained

16.23 points to close at 1,553.24, off an high of 1,554.33 and low of 1,537.25, as gainers thrashed losers 656 to 351 on total turnover of 3.36bn shares worth RM2.68bn.

Resistance at 1,559/1,580; Support at 1,533/1,498

Even as stocks edge higher, underlying caution over the path of interest rate and inflation worries should keep buyers in check. Overhead resistance stays 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 remains at 1,533 and 1,498, the respective rising 50-day and 100-day moving averages, with better support seen at 1,480.

Bargain AMMB & CIMB

On AMMB, a decisive breakout above the 138.2%FP (RM4.46) should enhance upside momentum to the 150%FP (RM4.60), with tougher hurdles from the 161.8%FP (RM4.73) and 176.4%FP (RM4.89), while key supports are from the lower Bollinger band (RM3.94) and 76.4%FR (RM3.76). CIMB should rebuild support at current levels with recovery potential towards the 161.8%FP (RM7.07), with stronger profit-taking resistance anticipated at

176.4%FP (RM7.30) and 200%FP (RM7.68), while crucial chart supports from the 100-day ma (RM5.93) and 200-day ma (RM5.56) cushions downside risk.

Asian Markets Rebound as Traders Digest Powell’s Remarks

Asian markets rebounded on Thursday as traders reacted to the latest remarks from US Fed officials that helped ease recent concerns about the outlook for interest rates. Fed Chair Powell reiterated that the central bank will take a wait-and-see approach before reducing borrowing costs. However, his views that recent inflation figures did not “materially change” the overall picture offered support for risk assets. The case for easing was underpinned by a survey of the U.S. services sector, which showed its index of prices paid fell to the lowest since March 2020, offsetting a worrying rise in the survey of manufacturing released early this week.

In economic news, the services sector in Australia continued to expand in March, and at a faster pace, the latest survey from Judo Bank revealed on Thursday with a services PMI score of 54.4. In Australia, the S&P/ASX 200 rose 0.45% and closed at 7,817.3, after clocking losses for two days. Japan’s Nikkei 225 also gained 0.81% to 39,773.14 and, while the broad-based Topix added 0.94% to 2,732.00. In South Korea, the Kospi jumped 1.45% to 2,746.31, while markets in Hong Kong, mainland China and Taiwan are closed for a public holiday.

Wall Street Sinks on Rate Worries

Wall Street’s main indexes finished sharply lower overnight after Federal Reserve officials suggested interest-rate cuts might not be imminent. The Dow Jones Industrial Average lost 1.35% to close at 38,596.98. The S&P dropped 1.23% to close at 5,147.21, while the Nasdaq Composite dipped 1.40% to 16,049.08. All three major averages reversed strong midday gains after Minnesota Fed President Neel Kashkari suggested the Fed may not cut interest rates at all this year if inflation progress stalls. Separately, Richmond Fed President Thomas Barkin said the U.S. central bank has "time for the clouds to clear" on inflation before starting to cut rates. The late-day sell-off on Wall Street also came amid a continued surge by the price of crude oil, which advanced for the fifth straight session and reached its highest levels since last October.

Earlier in the session, stocks benefited from a positive reaction to a Labor Department report showing the number of Americans filing new claims for unemployment benefits increased more than expected last week. All eyes are now set to turn to the March jobs report, due on late Friday, will be a key economic input for the Fed's data-dependent policy decision-making. Health care and real estate were the worst performers in the S&P 500, down by 0.9% and 0.6%, respectively. Consumer staples was the third biggest laggard, off by 0.3%. Energy was the only advancer in the S&P 500 following a late-day slump in stocks. The sector gained 0.1%.

Source: TA Research - 5 Apr 2024