The local market traded sideways on Tuesday, with technology stocks buoyed by rebound in global tech stocks while the broader market was mixed on concerns over China’s economy and a hawkish US central bank. The FBM KLCI was up 0.96 points to 1,451.53, after moving within early low of 1,449.19 and high of 1,456.4, as losers edged gainers 490 to 432 on flat turnover of 3.31bn shares worth RM1.93bn.

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

Stocks should stay range bound pending more significant domestic leads, and as caution over China’s potential measures to cushion its slowing economy and elevated US interest rates capping upside bias. 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 Supermax & Top Glove

Supermax is still base building above the lower Bollinger band (79sen), pending convincing breakout above the 100-day ma (86sen) to aim for key resistance areas near 93sen and RM1.03, while better chart supports are at 75sen and 70sen. Likewise, Top Glove need to climb above the 100-day ma (98sen) to boost upside momentum towards tougher hurdles at RM1.10 and RM1.25, while downside is cushioned by the lower Bollinger band (78sen) and 70sen.

Asian Markets Rebound on Bargain Hunting

Asian markets traded higher on Tuesday, as bargain hunters mopped up shares of heavyweights following a rally in big tech that spurred a rebound-on Wall Street overnight, though an overnight selloff in Treasuries kept risk sentiment in check. 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. Meanwhile, the benchmark 10-year Treasury note yield hit a high of 4.34%, reaching its highest level since November 2007. This is notable as higher bond yields generally mean lower stock prices. The key event for the week is the Fed's Jackson Hole conference, where markets assume Powell will note the jump in yields and the recent run of strong economic data.

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. Japan’s Nikkei 225 climbed 0.97% to closed at 31,856.71, while the Topix rose 1.08% and ended at 2,265.71. South Korea’s Kospi also gained 0.28% to finish at 2,515.74, and the Kosdaq was 0.52% up to end at 893.33. The Australian S&P/ASX 200 hovered just above the flatline and ended 7,121.60, while the Shanghai Composite added 0.88% to 3,120.33.

Wall Street Subdued Ahead of Jackson Hole Symposium

Wall Street's main indexes struggled for direction overnight as traders look ahead to the Jackson Hole symposium for signs of interest rate plans from the Federal Reserve. The Dow Jones Industrial Average fell 0.51% to 34,288.83. The S&P 500 lost 0.28% to 4,387.55, while the Nasdaq Composite inched higher by 0.06% to 13,505.87. Markets are awaiting more hints on the outlook for interest rates from policy makers when Fed officials and policy makers from the European Central Bank, the Bank of England and the Bank of Japan head to Jackson Hole, Wyoming, for their annual central bank conference later this week. Early volatility in the bond market may also have contributed to the choppy trading, with the yield on the benchmark ten-year note showing wild swings back and forth across the unchanged line before eventually closing modestly lower.

Concerns about the outlook for interest rates have contributed to a recent surge in bond yields, driving the ten-year yield to its highest levels in over fifteen years. On the U.S. economic front, the National Association of Realtors released a report showing existing home sales in the U.S. slumped by much more than expected in the month of July. Several regional and larger banks fell after S&P Global cut credit ratings and revised its outlook for multiple U.S. banks on Monday, citing “tough” operating conditions. The financial sector ended down 0.9%, making it the worst-performing sector of the S&P 500. KeyCorp and Comerica dropped 4.1% each. Big bank JPMorgan Chase also fell 2.1%.

Source: TA Research - 23 Aug 2023