Overnight U.S Rally to Cushion Local Market

The local blue-chip benchmark extended losses on Wednesday, dampened by the Biden administration’s decision to impose new restrictions on the exports of AI chips to China and the adverse economic impact of rising US-China trade tensions. The FBM KLCI lost 14.34 points to end at 1,562.12, off an early high of 1,586.21 and low of 1,558.60, as losers crowded gainers 964 to 193 on total turnover of 3.41bn shares worth RM3.08bn.

Support at 1,550/1,529; Resistance at 1,580/1,605

The overnight rally on Wall Street should cushion the lacklustre local market today, but undertone remains cautious as uncertainties surrounding the incoming Donald Trump administration persists. Immediate index support is revised downwards to 1,550, with stronger supports at the 6/8/24 low of 1,529 and the 1,500 psychological level. Immediate resistance is also revised lower to 1,580, with the next hurdles at 1,605 and 1,630, followed by 1648.

Bargain Maybank & Public Bank

Maybank needs a convincing breakout above the 123.6%FP (RM10.38) to target the 138.2%FP (RM10.62) and 150%FP (RM10.82) ahead, while key retracement supports are from the 100%FP (RM9.99) and RM9.79. Meanwhile, Public Bank looks attractive to bargain at current levels for recovery upside to the 123.6%FP (RM4.51), while a confirmed breakout should aim for the 138.2%FP (RM4.62) and 150%FP (RM4.71) ahead. Crucial support from the 100%FP (RM4.32) and RM4.23 cushion downside.

Asian Markets Subdued Ahead of U.S Inflation Data, Earnings

Asian markets treaded water on Wednesday as traders awaited U.S inflation data for clues on the path of Federal Reserve policy. Traders are cautious and reluctant to make more significant moves ahead of a more closely watched report on US consumer price inflation later in the day that could influence the US Fed's rate trajectory. Traders are also gearing up for the unofficial start of the earnings season, with results from big banks hitting the tape on Wednesday. Lenders, including JPMorgan Chase & Co. and Wells Fargo & Co. are expected to show continued gains from trading and investment banking,

Meanwhile, the People’s Bank of China pumped a near-historic amount of short-term cash into its financial system on Wednesday, dialing up liquidity support amid a cash squeeze with the new year holiday looming. Australia’s S&P/ASX 200 fell 0.22% to 8,213.30, while South Korea’s Kospi close slipped 0.02% to 2,496.81. Japan’s Nikkei 225 inched down by 0.08% to 38,444.58 and the Topix gained 0.31% to 2,690.81. In mainland, the Shanghai Composite fell 0.43% to 3,227.12, while the Hang Seng Index gained 0.34% to close at 19,286.07.

Wall Street Rallies on Economic Data, Robust Bank Earnings

Wall Street’s main indexes rallied overnight after an encouraging inflation report and blockbuster profits for some of America’s biggest banks. The Dow Jones Industrial Average rose 1.65% to close at 43,221.55. The S&P 500 jumped 1.83% to 5,949.91, while the Nasdaq Composite rallied 2.45% to 19,511.23. The rally on Wall Street reflects a positive reaction to the Labor Department's closely watched report on consumer price inflation in the month of December. U.S. Bureau of Labor Statistics data showed the consumer price index (CPI) rose in line with expectations at an annual rate of 2.9% in December, from November's 2.7%. But core inflation, which excludes food and energy prices, rose by 3.2%, which was below forecasts for 3.3%.

Traders were particularly encouraged by the latest inflation reading since data released on Tuesday showed that U.S. producer prices increased moderately in December. Spirits also got a boost from Wall Street bank earnings reports, which brought surging profits thanks to a deal making revival and investment banking strength. JPMorgan Chase delivered on optimistic analyst expectations with a second straight year of record profit, while Goldman Sachs profit beat estimates. Robust bank earnings for the fourth quarter are a positive signal for the wellbeing of the biggest players in US financial markets ahead of President-elect Donald Trump’s return to the White House.

Source: TA Research - 16 Jan 2025