Caution on US Trade Policy Impact

Stocks drifted lower on Thursday, ignoring gains in regional markets as investors remained cautious as they priced-in the potential adverse impact from new export restrictions on AI chips imposed by the US. The FBM KLCI fell 6.58 points to close at the day’s low of 1,555.54, off an early high of 1,576.57, as losers beat gainers 525 to 480 on a higher turnover of 3.61bn shares worth RM3.16bn.

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

Looking ahead, local market sentiment should continue to be impacted by concerns regarding potential US trade policies ahead of Donald Trump’s inauguration as president next week. Immediate index support remains at 1,550, with stronger supports at the 6/8/24 low of 1,529 and 1,500 psychological level. Immediate resistance is maintained at 1,580, with the next hurdles at 1,605 and 1,630, followed by 1648.

Bargain Velesto & Wasco

Velesto needs to rebuild support at current levels to enhance recovery upside towards the 50%FR (19sen), with next upside hurdle from the 61.8%FR (22sen), while downside is cushioned by the 23.6%FR (13sen) and 10sen. Investors should look to accumulate Wasco shares on weakness towards the key 50%FR (RM1.05) or 38.2%FR (92sen) support, for recovery upside to the 76.4%FR (RM1.35) and RM1.48 ahead.

Asian Markets Rise Following Dovish US Inflation Data

Asian markets mostly rose on Thursday following the overnight rally on Wall Street after a dovish US consumer price report lifted optimism for potential rate cuts by the US Federal Reserve. On economic news, Japan's annual wholesale inflation held steady at 3.8 per cent, fueling bets that the Bank of Japan may raise interest rates next week while South Korea’s central bank left its benchmark policy rate unchanged at 3% in a move that surprised investors, citing the need to support the won following recent political turmoil and downside risks to economic growth. Separately, Australia’s unemployment rate in December was 4.0% in line with expectations.

Meanwhile, US treasury yields falling after the tame inflation data, could also offer some lift to Asian equity markets. In the mainland, the Shanghai Composite rose 0.28% to 3,236.03, while Hong Kong’s Hang Seng index jumped 1.23% to 19,522.89. Japan’s Nikkei 225 went up 0.33% to 38,572.60 while the Topix lost 2.50% to 2,688.31. South Korea’s blue-chip Kospi gained 1.23% to end at 2,527.49, while Australia’s S&P/ASX 200 also rose 1.38% to 8,326.96.

Wall Street Slips as Traders Digest Earnings, Economic Data

Wall Street’s main indexes see-sawed to a lower close overnight as traders dug into bank earnings and mixed economic data. The Dow Jones Industrial Average fell 0.16% to close at 43,153.13. The S&P 500 slipped 0.21% to 5,937.34, while the Nasdaq Composite dropped 0.89% to 19,338.29. The major averages gave up gains from earlier in the day, which came on the back of strong corporate earnings. Morgan Stanley beat earnings expectations, sending the stock up more than 2%. Bank of America also exceeded bottom-line estimates, but the stock shed 2%. The results come a day after other financial peers such as JPMorgan Chase and Goldman Sachs also beat fourth-quarter estimates.

As traders waded through corporate earnings, overnight economic data was mixed. US homebuilders grew less upbeat about sales prospects, while retail sales figures pointed to a consumer that held up well in the holiday season. Wall Street also kept a close eye on comments from Treasury secretary nominee Scott Bessent, who said the US faces an economic crisis if the 2017 Republican tax cuts aren’t extended. Technology stocks were acting as a drag on the market, with Apple shares down 3.7%, putting them on pace for their worst day since Aug. 5. Tesla dropped 4.3%. Nvidia and Alphabet also lost around 1%.

Source: TA Research - 17 Jan 2025