Trade War Fears to Cap Rebound Upside

Bursa Malaysia shares rebounded on Tuesday as investors reacted positively to U.S. President Donald Trump's latest decision to pause imposing tariffs on Mexico and Canada for 30 days after successful negotiations with their respective leaders. The FBM KLCI rose 10.93 points to end near session highs at 1,564.56, off an early low of 1,554.59, as gainers led losers 544 to 415 on improved trade totaling 2.23bn, worth RM2.05bn.

Support at 1,550/1,529; Resistance at 1,605/1,630

Persisting concerns over escalating US-China trade tensions sparked by the current tit-for-tat tariffs being announced may restrict further rebound upside for the local benchmark. 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 1,605, with next upside hurdles at 1,630, followed by 1648.

Bargain CIMB & RHB Bank

CIMB shares remain in base building mode pending recovery to the 161.8%FP (RM8.34), with a confirmed breakout to aim for 176.4%FP (RM8.70) and RM9.00 ahead, while immediate chart supports are from the 138.2%FP (RM7.75) and 123.6%FP (RM7.39). RHB Bank need to climb above the 123.6%FP (RM6.66) convincingly, to target the 138.2%FP (RM6.85), with next resistance at the 150%FP (RM7.01), while key chart support from the lower Bollinger band (RM6.29) and the 76.4%FR (RM6.03) cushions downside.

Asian Markets Rebound as Trump Delays Tariffs

Stocks in Asia rebounded on Tuesday after President Donald Trump delayed tariffs on Mexico and Canada for a month. Traders breathed a sigh of relief after some of U.S. President Donald Trump's sweeping tariffs announced over the weekend were put on ice, allowing stocks and non-dollar currencies to claw back losses and regain some poise. Separately, Trump also said that his administration plans to speak with China, raising the possibility of a potential reprieve on a 10% tariff set to take effect in hours after he delayed levies on Canada and Mexico. China will be subject to 10% tariffs if no deal is reached by 12:01 a.m. Tuesday New York time.

Meanwhile, Federal Reserve Bank of Chicago President Austan Goolsbee said the central bank should proceed more cautiously in lowering borrowing costs amid mounting uncertainty introduced by the Trump administration. Japan’s Nikkei 225 gained 0.72% to 38,798.37, while the Topix added 0.65% to 2,738.02. South Korea’s Kospi also gained 1.13% to 2,481.69 and Australia’s S&P/ASX 200 inched down by 0.06% to 8,374.00. In Hong Kong, the Hang Seng Index jumped 2.83% to 20,789.96, while Chinese markets remain closed for the Lunar New Year holiday.

Wall Street Ends Higher Amid Easing Tariff Concerns

Wall Street’s main indexes moved higher in volatile trading session overnight as anxiety dissipated somewhat after President Donald Trump agreed to a 30-day pause on his tariff threats against Mexico and Canada. The Dow Jones Industrial Average rose 0.30% to close at 44,556.04. The S&P 500 gained 0.72% to 6,037.88, while the Nasdaq Composite jumped 1.35% to 19,654.02. Market sentiment got a boost overnight as Trump announced a 30-day pause on tariffs on Mexico and Canada. The pauses came after both countries agreed to take steps toward preventing the trafficking of opioid fentanyl into the U.S. Meanwhile, traders have largely shrugged off news that China has slapped retaliatory tariffs on U.S. imports in response to a 10% trade duty imposed on Chinese goods.

The Chinese government slapped tariffs of up to 15% on U.S. imports of coal and liquefied natural gas and 10% higher duties on crude oil, farm equipment and selected cars, effective Feb. 10. Traders also took in fresh jobs data, with job openings declining more than expected in December. Traders are continuing to watch any signs of cooling in the labour market as the Federal Reserve debates future interest rate cuts in the face of sticky inflation. The data has led to some optimism about the outlook for interest rates ahead of the release of the Labor Department's more closely watched monthly jobs report on Friday.

Source: TA Research - 5 Feb 2025