BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
The FBM KLCI made a strong up move at the start of the week’s trading with banks leading the charge that sent the key index to its highest level in nearly two years.
Banks were seen as beneficiaries of the prolonged high interest rate environment as the US Federal Reserve is leaning towards keeping the high rates for now to control inflation.
The post Chinese New Year rally also saw most lower liners and broader market shares ending the day with firm gains but largely on low volumes.
Yesterday’s gains were a surprise with the strong buying interest from foreign funds allowing for the key index to break out of its range-bound trend.
However, we think that profit taking activities could set-in as some of the gains are digested following the weakness on Wall Street overnight.
As it is, US stocks tumbled on a firmer-than-expected US inflation reading that is also likely to prolong the high interest rate environment which could also slow the US economic environment.
At the same time, much of yesterday’s gains were on low volume and may not be sustainable as follow through buying interest could still be weak.
Therefore, a pullback may see the key index slipping to the immediate support at the 1,526 level which is followed by the 1,520 level. The resistances, on the other hand, are pegged at the 1,535 and 1540 levels.
Malacca Securities Research
The FBM KLCI has moved out of the consolidation phase with strong buying interest within the banking sector after the Chinese New Year break.
However, Wall Street tumbled after the release of the US CPI (consumer price index) data which was above consensus’ expectations.
This has pushed back the market expectation of the interest rate cuts, translating to higher US Treasury yields and the stronger greenback.
Next to watch out will be the upcoming (i) retail sales and (ii) US PPI (producer price index) data.
Nevertheless, we expect the buying support may extend on the local front supported by several domestic catalysts at least for the near term.
Meanwhile, Brent crude price continues to trade above US$82/barrel with ongoing tension in the Middle East.
The FBM KLCI ended higher, breaking out of the consolidation phase. The technical readings on the key index were mixed with the MACD Histogram extending another negative bar while the RSI maintains above the 50 level.
The resistance is envisaged around 1,540-1,550 while the support is set at 1,500-1,510. – Feb 14, 2024
