Overnight US Rally to Cushion Local Market

The local market drifted lower for a third straight session on Wednesday, led by sell-offs in the healthcare sector after the government stated it is considering implementing the diagnosisrelated group (DRG) system to limit private healthcare treatment charges. The FBM KLCI lost 5.77 points to close at 1,603.20, off an early high of 1,605.01 and low of 1,598.93, as losers swarmed gainers 652 to 419 on lower turnover of 2.59bn shares worth RM2.46bn.

Resistance at 1,628/1,648; Support at 1,588/1,565

The overnight rally on Wall Street should cushion the lacklustre local market today, but undertone remains cautious as investors await cues on China’s economic policies and growth targets for next year from its Central Economic Work Conference. Immediate index resistance remains at 1,628, next 1,648, followed by the September peak of 1,675. Immediate support stays at 1,588, the 38.2%FR of the 1,529 low (6 Aug) to 1,684 high (29 Aug) rally, with stronger key supports at 1,565, the 23.6%FR level, and then 1,550.

Bargain Velesto & Wasco

Any further dip in Velesto would be attractive for bargain hunting for potential rebound towards the 50%FR (19sen), with next hurdle seen at the 61.8%FR (22sen) and 76.4%FR (25sen). Key support levels are at the 23.6%FR (13sen) and 10sen. Meanwhile, a confirmed breakout on Wasco above the 61.8%FR (RM1.19) would enhance upside momentum for share price to target the 76.4%FR (RM1.35), with next significant hurdle being the 11/07/24 high (RM1.45). Key retracement support from the 50%FR (RM1.05) and 38.2%FR (92sen) limit downside risk.

Asian Markets Subdued as Focus Switch to US Data

Stocks in Asia took a breather on Wednesday as traders await key US inflation data for clues on whether the Federal Reserve will cut or hold interest rates next week. Late Wednesday’s CPI will offer Fed officials another look at inflation ahead of their next meeting. Swap trading projects about an 85% chance of a quarter-point rate reduction this month. Meanwhile, China’s two-day Central Economic Work Conference is expected to map out policies for next year, with traders emboldened stimulus signals from top leaders.

On economic news, South Korea reported a seasonally adjusted unemployment rate of 2.7% in November, according to Statistics Korea, unchanged from the previous month. Australia’s S&P/ASX 200 fell 0.47%, while South Korea’s Kospi gained 1.02%. In Japan, the Nikkei 225 closed nearly unchanged at 39,372.23 and the broad-based Topix added 0.29%. In mainland, the Shanghai Composite gained 0.29%, while Hong Kong’s Hang Seng Index fell 0.77% to 20,155.05.

Nasdaq Tops 20,000 as Big Tech Surges

A rally in tech stocks boosted the Nasdaq above the 20,000-point milestone for the first time overnight after a U.S. inflation report boosted expectations of a Federal Reserve interest rate cut. The Nasdaq Composite jumped 1.77% to 20,034.89, while the S&P 500 gained 0.82% to 6,084.19. The Dow Jones Industrial Average fell 0.22% to 44,148.56 as healthcare stocks flagged. The strength on Wall Street comes following the release of closely watched consumer price inflation data that came in line with economist estimates. November’s consumer price index, which tracks a basket of goods and services, was in line with expectations. The reading showed a 0.3% rise from October and 2.7% increase from a year ago. Broadcom Inc. led the advance following a report that the chipmaker was working on an AI deal with Apple Inc.

The so-called Magnificent Seven stocks were once again in the pole position, with Apple, Amazon.com Inc. and Facebook parent Meta Platforms Inc., setting all-time highs. Bets on AI and big tech stocks have supercharged the stock market in 2024, pushing the S&P 500 to yearto-date gains of 28%. The index is on pace for back-to-back annual jumps of more than 20% for the first time since a four-year stretch that ended in 1998. UnitedHealth dropped nearly 5%. Pfizer and Johnson & Johnson also fell as federal lawmakers debate whether to make health insurers sell off their pharmacies.

Source: TA Research - 12 Dec 2024