Stocks drifted lower to consolidate sideways on Thursday, as investors fret over potential for China falling into a deflationary spiral following a sharp decline in inflation data. The FBM KLCI slipped 3.1 points to settle at 1,458.93, after moving within opening high of 1,460.70 and low of 1,453.37, as losers edged gainers 464 to 358 on slower turnover totaling 2.92bn shares worth RM1.83bn.

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

The local market should trade sideways with downward bias ahead of the weekend, as investors are likely to consolidate their positions and stay sidelined ahead of the keenly awaited outcome of the six state elections over the weekend. Immediate resistance for the index stays at 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 Gamuda & Tenaga

Gamuda need to overcome the upper Bollinger band (RM4.54) to fuel further upside momentum towards the 123.6%FP (RM4.72) and 138.2%FP (RM5.00) ahead, while the 100- day ma (RM4.19) and 200-day ma (RM3.91) provide strong uptrend supports. Tenaga will need convincing breakout above the 19/5/23 peak (RM9.82) to enhance upside potential and target the 123.6%FP (RM10.37) and 138.2%FP (RM10.71) going forward, with retracement support at the 76.4%FR (RM9.27) cushioning downside.

Most Asian Markets Trade Higher Ahead of U.S. Inflation Report

Most Asian markets traded higher on Thursday ahead of crucial U.S. inflation data that will help gauge whether the Federal Reserve is at the end of its aggressive rate hike policy. Those movements come ahead of July’s consumer price index data due later Thursday. Expectations from economists polled by Reuters are the inflation rate will come in at 3.3%, slightly higher from the 3% seen in June. Markets are pricing in a more than 50% chance that the Federal Reserve is done with interest rate hikes this year, the CME Fed Watch tool shows, as inflation moderates and the prospect of a soft landing increases.

On economic news, Japan’s wholesale inflation rate slowed for a seventh straight month to 3.6%, down from June’s revised figure of 4.3%. Wholesale inflation is measured by the corporate goods price index, which tracks the price companies charge each other for goods and services. Japan’s Nikkei 225 climbed 0.84% to 32,473.65, and the Topix rose 0.92% to 2,303.51. The Shanghai Composite also rose 0.31% to 3,254.56, and the Shenzhen Composite inched higher by 0.09% to 11,050.22. In Australia, the S&P/ASX 200 gained 0.26% to 7,357.40, while South Korea’s Kospi fell 0.14% to 2,601.56.

Wall Street Inch Higher After July Inflation Data

Wall Street's main indexes eked out narrow gains as newly released data showed inflation ticked up on an annual basis for the first time in over a year but disinflationary trends remained positive. The Dow Industrial Average added 0.15% to finish at 35,176.15. The S&P 500 inched up 0.03% to 4,468.83, while the Nasdaq Composite rose 0.12% to close at 13,737.99. All three indexes climbed more than 1% earlier in the session, with the Dow up more than 450 points. The early rally on Wall Street came after the Labour Department released a report showing the annual rate of consumer price inflation accelerated by slightly less than expected in the month of July. While the data reinforced expectations the Federal Reserve will leave interest rates unchanged next month, economists suggested "sticky" core inflation could leave the door open for the Fed to resume raising rates in November.

Separately, San Francisco Fed President Mary Daly also voiced cautious tone, saying that while recent inflation data was moving in the right direction, more progress was needed before she would feel comfortable the central bank had done enough. On earnings news, Disney gained 4.9% and was the best performer in the Dow after announcing an upcoming price hike for ad-free Disney+ subscriptions. Late Wednesday, the media giant also reported fiscal third-quarter earnings per share that beat expectations. Wynn Resorts also advanced 2.6% on a better-than-expected report.

Source: TA Research - 11 Aug 2023