Downward Bias Ahead of US Fed Meeting

Blue chips declined further on Tuesday, amid a lack of positive domestic catalysts with investors reluctant to make significant bets ahead of the Federal Reserve's interest rate decision later this week. The FBM KLCI fell 9.52 points to close at 1,597.33, off an early high of 1,606.81 and low of 1,594.51, as losers bashed gainers 704 to 346 on total turnover of 2.99bn shares worth RM2.44bn.

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

Cautious trade with a downward bias should persist given the underwhelming fiscal stimulus measures from China while investors await the outcome of the two-day FOMC meeting in the US. Immediate index 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. Immediate resistance remains at 1,628, next 1,648, followed by the September peak of 1,675.

Bargain Aemulus & VSI

Aemulus shares need sustained strength above the 38.2%FR (35sen) to enhance upward momentum towards the 50%FR (38sen), with next resistance seen at the 61.8%FR (42sen) ahead, while the lower Bollinger band (26sen) and the 01/12/23 low (23sen), limit downside risk. Meanwhile, VSI needs breakout confirmation above the 76.4%FR (RM1.18) to boost upside momentum and target RM1.26, with stronger upside hurdle coming at the peak of 15/07/24 (RM1.33), while crucial supports from the 50%FR (RM1.01) and 38.2FR% (94sen) cushion downside.

Asian Markets Wobble Ahead of Key Central Bank Meetings

Stocks in Asia wobbled Tuesday as traders awaited a raft of interest-rate decisions by central banks this week, including the Federal Reserve. All eyes will be on a multitude of central bank policy decisions slated for this week, with central banks in the United States, Japan, UK, Sweden, Norway, Indonesia and Thailand all meet this week, with the BOJ, the Bank of England, Norges Bank and Bank of Thailand expected to stand pat. Bank Indonesia on the other hand is expected to hike interest rates to support the rupiah , which is rooted near its lowest in four months.

Traders also remain concerned about the ongoing economic uncertainties in China amid lack of adequate financial policy measures. In mainland, the Shanghai Composite fell 0.73% to 3,361.49, while Hong Kong’s Hang Seng slipped 0.48% to 19,700.48. Japan’s Nikkei 225 also lost 0.24% to 39,364.68 and broad-based Topix fell 0.37% to 2,728.20. South Korea’s Kospi dropped 1.29% to 2,456.81, while Australia’s &P/ASX 200 traded 0.78% higher to close at 8,314.00.

Dow Logs Longest Losing Streak Since 1978

Wall Street’s major indexes fell overnight, with the Dow fell for the ninth consecutive trading session, its longest losing streak since 1978, as traders braced for the Federal Reserve’s rate decision and its forecast for next year. The Dow Jones Industrial Average slid 0.61% to settle at 43,449.90. The S&P 500 lost 0.39% and closed at 6,050.61, while the Nasdaq Composite dropped 0.32% to end at 20,109.06. Markets will scrutinize the accompanying Summary of Economic Projections, which is expected to temper Fed policy expectations for the coming year considering sticky inflation and robust economic data.

While the US economy is resilient, the prospect of inflationary import tariffs proposed by the incoming administration of Donald Trump may give Fed officials pause about the pace of further moves. In the meantime, traders also assessed a November reading on retail sales for insight into the health of the consumer and the economy. Sales rose 0.7%, faster than the 0.6% month-on-month gain expected, amid strong holiday spending.

Source: TA Research - 18 Dec 2024