Mild Uptrend on Hopes for Larger US Rate Cuts

Stocks extended mild gains on Wednesday, helped by overnight strength on Wall Street fueled by optimism that easing inflation data could encourage the US Federal Reserve to cut interest rates. The FBM KLCI gained 2.83 points to close at 1,612.35, off an early low of 1,606.49 and high of 1,613.63, as gainers edged losers 574 to 439 on total turnover of 3.57bn shares worth RM2.51bn.

Resistance at 1,620/1,628; Immediate Supports at 1,580/1,550

The local market should sustain mild uptrend on the back of the firm overnight US market closing, on hopes easing inflation could entice the US Federal Reserve to loosen monetary policy more aggressively. Immediate index resistance stays at 1,620, followed by 1,628 and

then 1,638, while immediate supports are at 1,580, then 1,550 and recent low of 1,529, with 1,520 and 1,500 as stronger supports.

Bargain Tenaga & TM

Tenaga will need decisive breakout above the 11/7/24 high (RM14.62) for uptrend continuation and aim for the 123.6%FP (RM16.03) and 138.2%FP (RM16.91) going forward, with uptrend support from the rising 100-day ma (RM13.02) cushioning downside. Likewise, TM need breakout momentum renewal above the 16/7/24 high (RM7.19) to aim for the

123.6%FP (RM7.81) and 138.2%FP (RM8.19) ahead, with the 100-day ma (RM6.47) providing uptrend support on any potential selloffs.

Asian Markets Mixed as Traders Brace for U.S. CPI Data

Asian markets were mixed on Wednesday as traders’ focus switched to U.S. CPI data and assessed economic reports from the region. The market took a cue from softer-thanexpected US wholesale price data on Tuesday, which boosted expectations that the Federal Reserve will cut interest rates next month. Traders will shift their attention to the July consumer price index figures from the U.S. due late Wednesday. On economic news, South Korea’s seasonally adjusted unemployment rate sank to 2.5% from 2.8% in July, hitting its lowest point since October 2023. In Japan, business sentiment at manufacturers turned slightly less confident in August compared with the month before, according to the Reuters Tankan survey.

The Reserve Bank of New Zealand cut its benchmark cash rate to 5.25%, surprising expectations from economists from a Reuters poll, which had earlier forecasted the central bank will maintain rates at 5.5%. Japan’s Nikkei 225 climbed 0.58% to close at 36,442.43, while the broad-based Topix rose 1.11% to 2,581.9. Australia’s S&P/ASX 200 saw a smaller rise of 0.30%, ending at 7,850.70 and South Korea’s Kospi gained 0.88% to 2,644.50. However, the Shanghai Composite fell 0.60% to 2,850.65, while Hong Kong’s Hang Seng index eased 0.35% to 17,113.36.

Wall Street Higher After CPI Data

Wall Street's main indexes edged mostly higher overnight as traders embraced another encouraging signal on consumer prices that is set to help shape the near-term future of interest-rate policy. The Dow Jones Industrial Average gained 0.61% to end the day at 40,008.39. The S&P 500 added 0.38% to close at 5,455.21, while the Nasdaq Composite inched higher by 0.03% at 17,192.60. A closely watched report on US inflation showed that consumer price increases came in line with estimates during the month of July, according to the latest data from the Bureau of Labor Statistics. The latest snapshots of wholesale and consumer prices not only suggest U.S. inflation is still easing, but they set up another mild increase in the Federal Reserve's favorite price gauge.

The Fed determines whether to raise or lower interest rates depending on the rate of inflation measured by the so-call PCE index. The PCE is seen as the most accurate barometer of inflation. Shares of Alphabet, the Google-parent, dropped on a media report that the U.S. Department of Justice is considering options that include breaking up the online search engine. Other mega caps were mixed, as Tesla and Meta Platforms dropped, while Microsoft and Nvidia rose.

Source: TA Research - 15 Aug 2024