Time For A Retracement

The FBM KLCI snapped a 7-day winning streak after hitting the resistance around
1,470 as profit taking activities were noticed within the banking heavyweights.
Similarly, Wall Street upward momentum was interrupted, halting a 9-day surge
despite consumer confidence index increased to a five-month high in December
amid growing optimism about the current and future business conditions. The
stronger consumer behaviour may provide clues that the economy may avoid a
recession next year. Meanwhile, the traders will monitor the upcoming data such as
the US GDP and PCE price index to determine the market’s direction going forward.
At this juncture, we expect local market movements to turn negative amid profit
taking activities from Wall Street. On the commodity markets, Brent oil prices traded
near USD80/bbl as traders priced in the elevated tension in the Red Sea.

Sector focus: As the retracement started in the US, we expect the Technology sector
to take a breather at least for today. Meanwhile, following the cabinet reshuffle that
includes a new “Minister of Digital”, oversee by Gobind Singh Deo, the Telco & Media
sector has been rising for the 9th session, hence we see more upside potential over
the near to mid-term. In view of KL-SG HSR to be revived next year, we like the
Construction, Building Material and Property sectors.

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