The local market rose on Tuesday, led by property, construction, banking and technology stocks, as investors switched focus to the eventual rollout of key infrastructure projects following the end of the state elections. The FBM KLCI gained 3.28 points to close at 1,460.28, off an early low of 1,456.27 and high of 1,463.29, as gainers led losers 603 to 369 on improved turnover of 3.87bn shares worth RM2.12bn.

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

While the local market could be buoyed by anticipation over key infrastructure project announcements, the weaker regional sentiment caused by China's property and economic growth worries may act to dampen the market tone. Key chart supports to cushion the 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 Bumi Armada & Dialog

Bumi Armada remains in a base building above chart supports from the lower Bollinger band (49sen) and the 38.2%FR (47sen), pending breakout confirmation above the 200-day ma (54sen) to aim for the 61.8%FR (57sen) and 76.4%FR (63sen) ahead. Likewise, Dialog is rebuilding support above the 38.2%FR (RM2.13), with a convincing breakout above the 61.8%FR (RM2.40) to target the 76.4%FR (RM2.58) and the 14/2/22 peak (RM2.85) going forward.

Asian Markets Sluggish on China Worries

Asian markets were pinned near one-month lows on Tuesday as China cut interest rates as another round of disappointing data underscored its economic malaise. China's central bank unexpectedly reduced a key interest rate by the most since 2020 to bolster an economy facing fresh risks from a worsening property slump and weak consumer spending. Separately, China's industrial production and retail sales figures for July both missed expectations, adding to the country's weak batch of economic data. The moves come as Beijing grapples with a sputtering economy, prompting calls for major policy support to kick-start growth.

Meanwhile, Japan's economy grew much faster than expected in April-June, as brisk auto exports and tourist arrivals helped offset the drag from a slowing post-COVID consumer recovery, although global recession prospects cloud the outlook. Japan’s Nikkei 225 climbed 0.56% to end at 32,238.89, while the Topix was up 0.41% and closed at 2,290.31. In Australia, the S&P/ASX 200 climbed 0.38% to close at 7,305 as investors digested the Reserve Bank of Australia’s minutes for its August monetary policy meeting, where it unexpectedly held its benchmark rates at 4.1%. Hong Kong’s Hang Seng index extended losses and slid 1.03%, while the CSI 300, a benchmark index for mainland Chinese markets, was down 0.2% and closed at 3,846.54.

Wall Street Ends Lower as Strong Retail Data Stoke Rate Worries

Wall Street's main indexes closed lower overnight after stronger-than-expected retail sales data stoked worries interest rates could stay higher for longer, while U.S. big banks dropped on a report that Fitch could downgrade some lenders. The Dow Jones Industrial Average slid 1.02% to 34,946.39. The S&P 500 lost 1.16% to 4,437.86, while the Nasdaq Composite fell 1.14% to 13,613.05. The weakness on Wall Street came after a stronger-than-expected report on U.S. retail sales data led some traders to rejig their forecasts for interest-rate cuts next year. The U.S. Commerce Department reported that U.S. retail sales had increased by 0.7% in July, ahead of the 0.4% economists had anticipated, leading traders to wonder if the Fed may have longer to go on its rate-hiking campaign to tame inflation.

Trader sentiment also weakened globally after China reported disappointing economic data and its central bank made a surprise rate cut. Meanwhile, shares of JPMorgan Chase and Wells Fargo dropped 2%, and Bank of America dropped 3%. The action came after Fitch warned it may have to downgrade credit ratings for dozens of banks, including JPMorgan Chase. Last week, Moody’s lowered its rating on 10 U.S. banks while putting other big institutions on a watchlist for potential downgrades.

Source: TA Research - 16 Aug 2023