Market Overview 4th Jan 2012

Wednesday, 4th Jan. The FBM KLCI retrace for the first time yesterday after resuming back for trading after it was closed for new year holiday on Monday. Other news to follow. 

"-U.S. stocks on Tuesday celebrated the start of a new trading year with gains of about 1.5% after a gauge of U.S. manufacturing hit a six-month high, adding to cheer that began with solid data from overseas. After rising as much as 262 points, the Dow Jones Industrial Average DJIA +1.47%  ended up 179.82 points, or 1.5%, to 12,397.38. It was the Dow’s highest close since July 26.

The S&P 500 Index SPX +1.55%  advanced 19.46 points, or 1.6%, to 1,277.06, with natural-resource firms faring best among its 10 industry groups. The Nasdaq Composite Index COMP +1.67%  climbed 43.57 points, or 1.7%, to 2,648.72."

 "-Asia markets rallied on Tuesday, with Hong Kong and Australian stocks jumping as an improvement in Chinese manufacturing activity helped improve sentiment. Other regional markets also posted strong gains after European stocks climbed the previous day in thin volumes, shrugging off data showing a contraction in euro-zone manufacturing data. The Hang Seng Index HK:HSI +2.40%  rose 2.4% to 18,877.41 in Hong Kong and the S&P/ASX 200 index AU:XJO +1.10%  finished 1.1% up at 4,101.20 in Sydney as both markets reopened for the first time in 2012. Elsewhere in the region, South Korea’s Kospi KR:0100 +2.69% jumped 2.7% to 1,875.41, while Taiwan’s Taiex added 1.5% to 7,053.38. U.S. markets were closed for a holiday Monday, while Japanese and mainland Chinese markets remained closed on Tuesday."

"-Crude futures on Tuesday ended at their best since mid-May after a gauge of U.S. manufacturing came in higher than expected and spurred hopes of more demand for oil.

A weaker dollar, higher U.S. stocks and lingering geopolitical concerns surrounding Iran also contributed to the rally. Crude futures for February delivery CL2G +0.01%  rose $4.13, or 4.2%, to end at $102.96 a barrel on the New York Mercantile Exchange. It was oil’s highest settlement since May 10, and the largest one-day percentage gain since Oct. 24."

"-US soybean futures ended at their highest level in two months, fueled by broad-based speculative buying across asset classes. Commodity-wide buying was sparked by weakness in the US dollar, combined with ongoing fear of yield losses in South America due to heat and dryness to propel prices, analysts say. The external financials attracted the funds, but weather issues for South America crops remained the dominant issue promoting higher prices, says Mike Zuzolo, president Global Commodity Analytics. CBOT March soy ended up 19 3/4c at $12.27 1/2/bushel. Soy product futures bounced with soybeans, fueled by widespread speculative buying across the commodity sector. Strength in soybeans fueled buying in soymeal and soyoil, as traders add risk premium amid the risk lower South American supplies if weather conditions continue to stress crops there, analysts say. CBOT March soymeal ended up $6.10 at $319.20/short ton, and March soyoil finished up 0.69c to 53.11 cents/pound."

FKLI- Stronger Recovery Inbound

Stock index closed lower yesterday, paving way for healthy retracement before rallying again for the near term. The FBM KLCI ended 17.19 lower to 1,523.71 level on yesterday closed while index futures the spot month Jan contract gained another three points to closed at 1,524.50 level. For stock index, most retracement was caused by banking sector mainly by Maybank, Public bank and CIMB. Technically, the positive momentum for index futures remain strong as the spot month contract remain to trade at least  five points (at least) premium most of the time. For today, index futures is likely to continue its recovery judging on Tuesday gap up that result in higher high candle. Of course the market would not always travel in straight line, some mild retracement or correction would take place but we are not expecting something serious on downside. Support is located around 1,514 while resistance is pegged at 1,532.

Daily Pivot Point
R2= 1532
R1=1528
S1= 1519
S2= 1514

 FCPO- Immanent Recovery From Last Week

 CPO futures continue to edged higher yesterday as it receive positive outcome from Soya oil futures recovery so far. Palm oil prices happen to gap up on yesterday opening after it resume to trade for the first time in year 2012. At close, the benchmark Mar closed RM50 to 3,225 level, this was the highest value since end of Nov least year. Words out that most market participant are covering their Short position due to local weather concern that might slow down palm oil productions. Apart from that, most traders are ignoring news over decline in global edible oil demand as independent palm oil surveyors announced palm oil export stood at 1.49 mln tons or 3% dropped for the month Dec vs Nov 2011. Technically, you can call yesterday gap up as a weekly price break out as palm oil prices manage to closed the day steadily without retracing below 3,200 level. We expect more upside potential for the palm oil prices to recover as there is yet any Bearish reversal sign yet, so far. For today, support is located around 3,191 while resistance is pegged at 3,261.

Daily Pivot Point
R2= 3261
R1= 3243
S1= 3208
S2= 3191
Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.