Further Downside on Bearish Momentum

Bursa Malaysia shares tumbled on Monday in line with the region and Wall Street last Friday, as strong US jobs data raised worries over sustained inflation and lower expectations for interest rate cuts. The FBM KLCI slumped 16.82 points to close at 1,585.59, off an early high of 1,599.36 and low of 1,578.97, as losers trounced gainers 913 to 211 on total turnover of 2.85bn shares worth RM2.54bn.

Support at 1,565/1,550; Resistance at 1,605/1,630

Given the recent bearish technical momentum and external market tone sparked by concerns over rising US inflation and lower chances for rate cuts, there could be further downside volatility before buyers return to cushion downside. Stronger support is seen at 1,565, the 23.6%FR level, then 1,550, and next key support from the 6/8/24 low of 1,529. Immediate resistance is revised lower to 1,605, with the next hurdles at 1,630 and 1,648, followed by the September peak of 1,675.

Bargain Hartalega & Kossan

Further weakness in Hartalega shares would be attractive to bargain for rebound upside towards the 19/12/24 high (RM4.00), with a breakout to aim for the 123.6%FP (RM4.27) and 138.2%FP (RM4.62) ahead, while key chart support is at the 76.4%FR (RM3.16) and 200-day ma (RM3.07). Likewise, Kossan should attract buyers looking for rebound upside towards recent high of RM2.87 (6/1/25), with breakout confirmation to target the 123.6%FP (RM3.09) and 138.2%FP (RM3.33) going forward. Key retracement supports from the 76.4%FR (RM2.33) and 61.8%FR (RM2.10) cushions downside risk.

Asian Markets Slump on US Rate Outlook

Asian markets tumbled on Monday as stronger than expected U.S employment data weighed heavily on the outlook for interest rates. The stronger-than-expected nonfarm payroll report raised concerns that the Federal Reserve will proceed with caution moving forward, which casts doubt on further interest rate cuts. Traders will shift their focus to signs of US inflation in data to be released this week, with the consumer price index report released on Wednesday. They’ll also be watching the New York Fed’s one-year inflation expectations due late Monday, producer prices on Tuesday and jobless claims on Thursday.

Not helping was a spike in oil prices to four-month highs amid signs of weaker crude shipments from Russia as Washington stepped up sanctions on the country. The Biden administration has sought to ratchet up pressure on Russia and dispense aid to Ukraine before Presidentelect Donald Trump takes office. Australia's S&P/ASX 200 fell 1.23% to close at 8,191.92 and South Korea’s Kospi dropped 1.04% to 2,489.56. In mainland, the Shanghai Composite slipped 0.25% to 3,160.76, while the Hang Seng Index dropped 1% to 18,874.14. Japan markets are closed for a holiday.

Wall Street Ends Mixed on Tech Weakness

Wall Street’s main indexes drifted to a mixed finish overnight, with major tech stocks sliding as the bond yields climbed amid fading hopes for interest rate cuts ahead of this week's key consumer inflation report. The Dow Jones Industrial Average gained 0.86% to close at 42,297.12. The S&P 500 inched higher by 0.16% to 5,836.22, while the Nasdaq Composite fell 0.38% to 19,088.10. Surging bond yields have been one of the catalysts for the sell-off in growth-oriented shares as the 10-year Treasury yield touched the highest level since November 2023. The next big test for stocks and bonds could arrive Wednesday, when U.S. consumer-price inflation data are due.

Meanwhile, the advance by the Dow partly reflects a strong gain by UnitedHealth after the U.S. government proposed a 4.3% average total increase to its 2026 reimbursement rates for Medicare Advantage plans. Nvidia fell nearly 6%, while Palantir lost 11%. Other popular tech shares including Apple and Micron were also down. Energy climbed, the biggest daily gain of the 11 major S&P sectors, as crude prices kept rising on expectations that U.S. wider sanctions on Russian oil would force buyers in India and China to other suppliers.

Source: TA Research - 14 Jan 2025