Cautious Ahead of Key US Inflation Data

Profit-taking pressure on key construction, healthcare and plantation heavyweights dragged the local blue-chip benchmark to end at session lows on Tuesday. The FBM KLCI fell 9.13 points to settle at the day’s low of 1,576.46, off an early high of 1,599.43, as losers beat gainers 588 to 400 on higher turnover of 3.45bn shares worth RM2.72bn.

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

Market sentiment will likely remain cautious as investors await the release of key U.S. inflation data later this week. Stronger supports are 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 Aemulus & Inari

Aemulus shares should attract bargain hunting interest ahead of recovery upside towards the 23.6%FR (30sen), with breakout confirmation to target the 38.2%FR (35sen) and 50%FR (38sen) going forward. Key chart supports are from the 01/12/23 pivot low (23sen) and 20sen to cushion downside risk. Any further dip in Inari shares toward better supports from 23.6%FR (RM2.53) and RM2.40 should attract buyers looking for oversold rebound towards the 50%FR (RM3.04), with tougher hurdles seen at 61.8%FR (RM3.27) and 76.4%FR (RM3.55) capping upside.

Asian Markets Rebound on Slower Tariff News

Stocks in Asia rebounded on Tuesday, as markets in the region cheered news that Presidentelect Donald Trump's economic team is discussing a cautious and slow approach in implementing tariff hikes to avoid an inflation spike. President-elect Donald Trump's economic advisers are discussing slowly ramping up tariff’s month by month, a gradual approach aimed at boosting negotiating leverage while mitigating the upside inflation risk, according to people familiar with the matter. The possibility of gradually implemented US tariffs is stirring a note of optimism across Asia, given Trump’s threats have loomed over all asset classes in the region, particularly China.

In Asia, China has ramped up its support for the yuan with tweaks to its capital controls and a vow to crack down on market disruption, after the currency dropped close to a record low against the dollar in offshore trading. Australia’s S&P/ASX 200 closed 0.48% higher at 8,231 and South Korea’s Kospi gained 0.31% to 2,497.40. In mainland, the Shanghai Composite surged 2.54% to 3,240.94 while the Hang Seng Index jumped 1.83% to 19,219.78. Australia’s S&P/ASX 200 also closed 0.48% higher at 8,231.00 and South Korea’s Kospi gained 0.31% to 2,497.40. Japan’s markets were the only outlier, with the Nikkei 225 falling 1.83% to 38,474.30 and the Topix dipped 1.16% to 2,682.58.

Wall Street Ticks Up Ahead of Economic Data, Earnings

Wall Street’s main indexes ticked higher in choppy trade overnight as traders gauged inflation data and braced for quarterly earnings reports to justify stock valuations and the strength of the U.S. economy. The Dow Jones Industrial Average gained 0.52% to close at 42,518.28. The S&P 500 inched higher by 0.11% to 5,842.91, while the Nasdaq Composite fell 0.23% to 19,044.39. Stocks received an initial boost after a Labor Department report showed the producer price index rose moderately in December 2024, but this did little to change perceptions about the Federal Reserve's likely monetary policy path this year. Traders are now looking to late Wednesday’s consumer price index report to gauge whether the Federal Reserve is succeeding at bringing inflation close to its 2% target, which would allow the central bank to ease interest rate policy.

Quarterly earnings also get under way late Wednesday with results from big banks, which are expected to post stronger profits, fueled by robust deal making and trading. Markets also weighed a report which said that President-elect Donald Trump's incoming administration was considering gradual tariff hikes, including a plan to increase import duties by 2% to 5% a month. Big Tech stocks slipped again, weighing on the S&P 500 and Nasdaq. Nvidia dropped nearly 2%, and Meta Platforms fell 3%. However, investors flocked toward utilities, industrials and financials, with each sector up about 1%.

Source: TA Research - 15 Jan 2025