The local benchmark rose on Tuesday, aided by mild bargain hunting interest in key banking, plantation and utility heavyweights ahead of this weekend’s highly anticipated state elections. The FBM KLCI added 5.19 points to close at 1,451, off an early low of 1,441.63 and high of 1,452.47, as gainers led losers 437 to 389 on turnover of 3.17bn shares worth RM1.71bn.

Resistance at 1,464/1,470; Supports at 1,433/1,420

Stocks should stay mostly range bound ahead of this weekend’s closely watched state elections, with the weak trade numbers from China and pending inflation data from the US and China to check investor commitments. Immediate index resistance will be last week’s high of 1,464, with 1,470, and the 1,490/1,500 level acting as tougher upside hurdles. Immediate support cushioning downside will be last week’s low of 1,433, with stronger supports seen at 1,420 and 1,400.

Bargain Maybank & Public Bank

Maybank likely to sustain its long-term uptrend and overcome the upper Bollinger band (RM9.08) and aim for the 123.6%FP (RM9.18), 138.2%FP (RM9.43) and 150%FP (RM9.62) ahead, with uptrend support from the rising 100-day ma (RM8.68) and 200-day ma (RM8.53) cushioning downside. Public Bank will need to climb above the 61.8%FR (RM4.23) to boost upside momentum and challenge the 76.4%FR (RM4.38) and 4/4/22 peak (RM4.60), while key retracement supports from the 38.2%FR (RM4.00) and 23.6%FR (RM3.86) cushion downside.

Asian Markets Mixed on Weak China Data

Asian markets close mixed on Tuesday as traders digested weaker Chinese trade data ahead of key inflation readings from China and the United States due later this week. China's imports and exports fell much faster than expected in July as weaker demand threatens recovery prospects in the world's second-largest economy, heightening pressure for authorities to release fresh stimulus to steady growth. The prospect of economic stimulus from China's central government to reinvigorate a flat-lining economy is still being contemplated by traders. Minor measures to help property markets have been delivered in the past fortnight, but no broad stimulus has been outlined.

Meanwhile, the release of the consumer price index from the US due later this week will provide investors with clues on the Federal Reserve’s policy outlook. Japan’s Nikkei 225 rose 0.38% to take its winning streak to three days and end at 32,377.29, while the Topix was up 0.34% and closed at 2,291.73. In Australia, the S&P/ASX 200 ended almost flat at 7,311.10, while South Korea’s Kospi dipped 0.26% to 2,573.98 and the Kosdaq slipped 0.65% to 892.34. In mainland, the Shanghai Composite fell 0.25% to 3,260.62 and Shenzhen Component lost 0.42% to 11,098.44.

Wall Street Ends Lower After Moody’s Downgrade

Wall Street’s major indexes closed lower overnight after Moody's cut the credit ratings of 10 small- to mid-sized U.S. banks and China's trade data was worse than forecast in July, raising concerns about the global economic outlook. The Dow Jones Industrial Average fell 0.45% to close at 35,314.49. The S&P 500 dipped 0.42% to end at 4,499.38, while the Nasdaq Composite lost 0.79% to 13,884.32. Worries about US banks were revived after Moody's downgraded 10 small and midsize institutions, citing deposit risk, a potential recession and struggling commercial real estate portfolios. Optimism about stocks also took a hit after data showed a slump in Chinese imports and exports in July that was far worse than expected.

In another potential banking woe, credit card delinquencies rose to a 11-year high in the second quarter as measured on a four-quarter average as Americans borrowed more than ever, the New York Federal Reserve Bank said in its quarterly household debt and credit report. Goldman Sachs and JPMorgan Chase slid around 2.1% and 0.6%, respectively, while the SPDR S&P Bank ETF (KBE) dropped 1.3%. The SPDR S&P Regional Banking ETF (KRE) also lost 1.3%.

Source: TA Research - 9 Aug 2023