Bursa Malaysia shares closed softer on Monday, as the results of the six state elections over the weekend was within market expectations but saw the current unity government losing support in its traditional strongholds. The FBM KLCI eased 0.16 points to settle at 1,457, off an early low of 1,452.15 and high of 1,457.43, as gainers led losers 575 to 404 on total turnover of 3.53bn shares worth RM1.89bn.

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

Stocks should trade sideways with downward bias given the softer regional tone due to China’s economic growth worries, and weaker state support for the current unity government. Key chart supports to cushion downside on the index are at the recent low of 1,433, then 1420/1,400, while immediate overhead resistance is from the recent high of 1,464, then 1,470, followed by the 1,490/1,500 level.

Bargain Gadang & Sunway Construction

Gadang need to climb above the 23.6%FR (31sen) to boost upside momentum towards the 38.2%FR (34sen), with next hurdle from the 50%FR (36sen), while the lower Bollinger band (28sen) and 29/9/22 low (27sen) limit downside risk. Sunway Construction will need to overcome the 2/8/23 high (RM1.83) to enhance upside potential and target the 123.6%FP (RM1.89), 138.2%FP (RM1.95) and 150%FP (RM2.00) ahead, with key retracement support at the 76.4%FR (RM1.68) cushioning downside.

Asian Shares Fall on China Property Woes

Asian shares slid on Monday as China's property woes amplified the case for serious stimulus even as Beijing seems deaf to the calls. Geopolitics was an added worry after a Russian warship on Sunday fired warning shots at a cargo ship in the southwestern Black Sea, heralding a new stage of the war that could impact oil and food prices. Adding to concerns about the deteriorating health of the country's debt-laden property developers was news two Chinese listed companies had not received payment on maturing investment products from Zhongrong International Trust Co. China's Country Garden, the country's top private property developer, is also set to suspend trading of its 11 onshore bonds from Monday.

Japan’s Nikkei 225 fell 1.27% to close at 32,059.91 and the Topix lost 0.98% to end at 2,280.89. Japan will see its second quarter gross domestic product figures out on Tuesday, while July’s inflation print will come in on Friday. South Korea’s Kospi was down 0.79% and ended at 2,570.87, and the Kosdaq saw a larger loss of 1.15% to finish at 901.68. Both indexes extended their losing streak to three days. Meanwhile, Australia’s S&P/ASX 200 was 0.86% lower to record its second straight day of losses at 7,277.

Tech Stocks Lift Wall Street Higher

Wall Street's main indexes closed higher overnight, led by mega-cap growth stocks ahead of economic data that could shed light on the health of the American consumer. The Dow Jones Industrial Average advanced inched up 0.07% to end at 35,307.63. The S&P 500 added 0.58%, to 4,489.72, while the Nasdaq Composite gained 1.05%, ending the day at 13,788.33. Tech stocks had their best day in two weeks, helping US equities edge higher in light trading as traders weighed the prospect of a soft landing for the economy. Nvidia closed 7.1% higher, marking a turnaround for the chip giant after it sold off 8.5% last week. Optimism surrounding AI has helped lift tech stocks broadly following a brutal 2022 defined by sharply rising interest rates and fears of a near-term recession. Other mega cap growth stocks rose, including Alphabet, up 1.4% and Amazon.com, up 1.6%. Chipmaker Micron Technology ended with a 6.1% gain.

Activity in the market was somewhat subdued due to a lack of major U.S. economic data. Trader eyes will be on the release of the minutes from the Federal Reserve's last policy meeting, in which the central bank resumed its rate-hike campaign. Wall Street will be keen to decipher any clues in the minutes that point to the Fed's next move in September. Traders are betting interest rates will outpace inflation for years to come while investors sitting on record first-half gains are having to contend with central bankers warning they are in no rush to cut interest rates.

Source: TA Research - 15 Aug 2023