Sentiment Upbeat on US Fed Rate Cut Cue

Blue chips rose on Thursday, led by construction (+3.8%), technology (+2.7%) and telco (+2%) heavyweights, mirroring regional strength after the US Federal Reserve slashed interest rates by 50 basis points and cued for further rate cuts ahead. The FBM KLCI gained 5.06 points to close at 1,665.65, off an early low of 1,657.13 and high of 1,665.84, as gainers led losers 898 to 322 on higher turnover of 3.99bn shares worth RM4.08bn.

Key Resistance at 1,670/1,684; Supports at 1,633/1,620

The local market should be buoyed by the upbeat global sentiment on the back of the US Federal Reserve’s dovish cue for further rate cuts of a half-point by year-end and full point next year, which would encourage further fund flows into the region. Immediate index resistance remains at 1,670, with the recent high of 1,684, then 1,695, the Dec 2020 high, as tougher resistance levels. Immediate support will be at the recent correction low of 1,633, with 1,620 and 1,600 acting as stronger supports.

Bargain UEM Sunrise & WCT Holdings

UEM Sunrise will need to sustain breakout above the 200-day ma (RM1.02) to boost upside momentum towards RM1.20 and challenge the 20/5/24 high (RM1.28), with downside risk capped by the lower Bollinger band (80sen) and 50%FR (76sen). WCT Holdings need to overcome the 76.4%FR (RM1.14) to fuel recovery momentum towards RM1.25 and re-test the 23/7/24 high (RM1.35) ahead, while the 50%FR (90sen) and 100-day ma (89sen) will act to limit downside.

Asian Markets Rise as Fed Rate-Cut Boost Sentiment

Stocks in Asia rose on Thursday after the US Federal Reserve cut interest rates by half a percentage point and signaled further easing in the months ahead. The Fed lowered its window for the benchmark policy rate by 50 basis points to 4.75-5%, where markets had been leaning before the decision. The Fed’s first cut in more than four years was accompanied by projections indicating an additional 50 basis points of cuts across the remaining two policy meetings this year. Separately, the Hong Kong Monetary Authority cut its interest rate by 50 basis points to 5.25%, as the city’s currency is pegged to the greenback. The Bank of England meets later Thursday and is seen holding rates at 5%, especially after inflation figures showed services inflation picked up in August.

Meanwhile, the Bank of Japan sets policy on Friday and is expected to stand pat but line up future hikes, perhaps as soon as October. Japan’s Nikkei 225 rose 2.13% to end at 37,155.33, while the broad-based Topix climbed 2.01% to finish at 2,616.87. South Korea’s blue-chip Kospi ended 0.21% higher at 2,580.80 and Australia’s S&P/ASX 200 added 0.61% to close at 8,191.90. The Shanghai Composite also rose 0.69% to 2,736.02, while Hong Kong’s Hang Seng index jumped 2% to 18,013.16.

Jumbo Fed Rate-Cut Sparks Wall Street Rally

Wall Street’s major indexes romped to records overnight, as traders belatedly gave a very warm welcome to the Federal Reserve’s bold interest-rate cut. The Dow Jones Industrial Average advanced 1.26% 42,025.19, marking its first close above the 42,000 thresholds. The S&P 500 rose 1.70% to close at 5,713.64, topping 5,700 for the first time. The Nasdaq Composite surged 2.51% to end at 18,013.98. The rally on Wall Street came as traders took a closer look at the Fed's decision to kick-start its new rate cycle with a 50-basis point cut. Adding to the optimism about the economy, the Labor Department released a report showing first-time claims for U.S. unemployment benefits unexpectedly fell to a nearly four-month low in the week ended September 14th.

Semiconductor stocks turned in some of the market's best performances on the day, with the Philadelphia Semiconductor Index soaring by 4.3%. Nvidia and AMD shares popped about 4% and nearly 6%, respectively. Micron Technology added 2.2%. Other Big Tech stocks such as Meta Platforms and Alphabet advanced 3.9% and 1.5%, respectively. Stocks leveraged to lower rates spurring the economy also jumped overnight. Financial giant JPMorgan Chase rose 1.4%. Industrial stock Caterpillar and Home Depot gained 5.1% and 1.7%, respectively.

Source: TA Research - 20 Sept 2024