Bursa Malaysia shares stayed mostly range bound on Monday, but bargain hunting in telcos and key utility stocks highlighted trade and managed to shore up the local blue-chip benchmark index. The FBM KLCI climbed up 4.48 points to close at 1,450.57, off an early low of 1,445.1 and high of 1,451.68, as losers edged gainers 498 to 446 on total turnover of 3.31bn shares worth RM2.24bn.

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

The local market should continue to trade sideways, with rotational interest on utility and steel related stocks highlighting trading, but external concerns over China’s lacking stimulus to cushion its slowing economy and threat of further US rate hikes amid high inflation should check gains. On the index, immediate chart supports are from the recent low of 1,433, then 1420/1,400, while resistance will be at the recent 1,464 high and 1,470, with next upside hurdle from the 1,490/1,500 levels.

Bargain Aemulus & Hiap Teck

Aemulus remains in base building phase, pending renewed buying momentum which is key to overcome the upper Bollinger band (34sen) and aim for the 200-day ma (38sen) and 38.2%FR (45sen) ahead, while the 12/5/23 low (29sen) should limit downside risk. Hiap Teck will need breakout confirmation above the 50%FR (43sen) to target the 61.8%FR (48sen) and 76.4%FR (55sen) going forward, with uptrend supports from the 30-day ma (35sen) and 50-day ma (34sen) cushioning downside.

Asian Markets Mixed as China Stimulus Underwhelms

Asian markets traded mixed on Monday as traders braced for a further market downturn on China’s woes and more policy tightening globally. Trader concerns were amplified by China’s disappointing loan-rates data that weighed on broader Asian equities. China's central bank cut its one-year loan prime rate by 10 basis points to 3.45%, but held the five-year LPR at 4.2%. Reuters reported that in a poll of 35 market watchers, all participants predicted cuts to both rates, after China’s central bank unexpectedly lowered the medium-term lending facility rate last week. Traders have been hoping for a repeat of the massive fiscal spending that has juiced the economy in the past, but Beijing seems reluctant to add to its borrowing tasks.

While concerns of an imminent recession are fading, wary investors are instead facing entrenched inflation and the prospect of more policy tightening ahead of the annual Jackson Hole, Wyoming, event on Thursday and Friday, which features speakers including Federal Reserve Chair Jerome Powell and his European counterpart President Christine Lagarde. In Australia, the S&P/ASX 200 slipped 0.46% to fall to its lowest point since July 11 and closed at 7,115.50, while the Shanghai Composite dropped 1.24% to 3,092.98. Meanwhile, Japan’s Nikkei 225 rebounded and gained 0.32% to close at 31,565.64, and South Korea’s Kospi rose 0.17% to 2,508.80.

Tech Rally Lift Nasdaq off Recent Lows

The Nasdaq led gains among Wall Street's main indexes overnight as a rally in big tech spurred a rebound in stocks, outweighing concerns over higher Treasury yields just a few days ahead of a speech by Federal Reserve Chair Jerome Powell. The Dow Jones Industrial Average fell 0.11% to 34,463.69. The S&P gained 0.69% to 4,399.77, while the Nasdaq Composite rose 1.56% to 13,497.59. The spike by the Nasdaq came as traders picked up tech stocks at reduced levels following recent weakness, with the index bouncing off its lowest closing level in two months. A host of tech companies gained ground despite uncertainty over the economy and a souring mood over the Fed's interest rate policy. Chief among those was Nvidia, the chipmaking giant popped 8.3% ahead of its earnings report due Wednesday. Tesla and Meta also climbed 7% and 2.4%, respectively. Those moves came even as the benchmark 10-year Treasury note yield hit a high of 4.34%, reaching its highest level since November 2007.

Meanwhile, a steep drop by Johnson & Johnson contributed to the dip by the Dow, with the healthcare giant slumping by 3%. Later this week, traders are anticipating an address Friday morning from Federal Reserve Chair Jerome Powell at the central bank’s annual symposium at Jackson Hole, Wyoming. Any hint that officials think that interest rates is higher than it used to be could provide further cause for longer-term Treasury yields to rise, investors say, while suggestions to the contrary could lead to a rally in bond prices. A majority of polled analysts think the Fed is done hiking, while traders are betting on a 40% chance of a final Fed hike by November.

Source: TA Research - 22 Aug 2023