While Bursa Malaysia blue chips stayed range bound on Monday, shares in the property (+3.7%) and construction (+2.5%) sectors surged on hopes for major infrastructure development and policy tweaks to benefit the sectors. The FBM KLCI ended flat at 1,444.06 (-0.35) after moving within tight range bordering high of 1,445.31 and low of 1,441.78, as gainers led losers 580 to 478 on robust trade totaling 4.46bn shares worth RM2.85bn.

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

Blue chips are likely to extend current sideways trade, pending firmer leads on infrastructure projects or policy announcements to sustain the recent strong run-up in both the property and construction sectors. Immediate supports cushioning the index remains at the recent low of 1,433, then 1420/1,400, while looking ahead, a convincing breakout above the 1,464 high and 1,470 backed by stronger buying momentum should accelerate rise towards the 1,490/1,500 resistance level.

Bargain AMBank & CIMB

AMBank has returned to base building process with the 100-day ma (RM3.60) and 50%FR (RM3.52) to cushion downside, while a breakout above the 76.4%FR (RM3.82) and upper Bollinger band (RM3.90) should encourage a re-test of the 14/12/22 high (RM4.09) ahead. CIMB will need convincing breakout above the 24/11/22 high (RM5.76) to aim for the 123.6%FP (RM6.08) and 138.2%FP (RM6.28) going forward, while downside should be cushioned by the 76.4%FR (RM5.43).

Asian Markets Higher on China Stimulus Measures

Asian markets closed higher on Monday after China announced a slew of measures to woo back investors including a reduction of the stamp duty on stock trades and a slower pace of initial public offerings. Beijing on Sunday announced it would halve the stamp duty on stock trading in the latest attempt to boost the struggling market and followed steps to support the housing market. The levy charged on stock trades will drop from 0.1% to 0.05% as of Aug. 28, according to the Ministry of Finance. Eyes are now on the official PMI for August out on Thursday, which is still expected to show activity is in the red. Meanwhile, the market did manage to weather a slightly hawkish outlook from Federal Reserve Jerome Powell, who reiterated they might have to raise rates again but promised to move "carefully".

Much will depend on the flow of U.S. data, which had been running hot until a batch of manufacturing surveys last week pointed to a slowdown both at home and abroad. That raised the stakes for this week's ISM survey on manufacturing, along with reports on payrolls, core inflation and consumer spending. Japan’s Nikkei 225 jumped 1.73% to 32,169.99, while the Topix added 1.47% to 2,299.81. South Korea’s Kospi rose 0.96% to 2,543.41, and the Kosdaq added 1.11% to 909.38. In mainland, the Shanghai Composite gained 1.18% to 3,100.33, while Australia’s S&P/ASX 200 advanced 0.63% to 7,159.80.

Wall Street End Higher as Investors Await US inflation, Jobs Data

Wall Street ended higher overnight, with gains in 3M and Goldman Sachs ahead of key inflation and jobs data this week that will offer more clues on the Federal Reserve's interest rate path. All three major stock indexes rose as investors digested last Friday's comments from Fed Chair Jerome Powell that the U.S. central bank may need to raise interest rates further to ensure inflation is contained. Focus now shifts to a report on the personal consumption expenditures price index, the Fed's preferred inflation gauge, to be released on Thursday, and non-farm payrolls data due on Friday. The Nasdaq gained 0.84% to 13,705.13 points, while Dow Jones Industrial Average rose 0.62% to 34,559.98 points. The S&P 500 climbed 0.63% to end the session at 4,433.31 points.

Nvidia rose 1.78% and was the most traded stock in the S&P 500, with USD31 billion worth of the chipmaker's shares exchanged. Other megacaps also gained, with Apple and Alphabet both adding 0.9%. 3M jumped 5.2% after a report that the conglomerate has tentatively agreed to pay more than USD5.5 billion to resolve over 300,000 lawsuits claiming it sold the U.S. military defective combat earplugs. U.S.-listed shares of Chinese companies including JD.com, Baidu and Alibaba rallied over 2% after China halved the stamp duty on stock trading effective Monday to boost its ailing market.

Source: TA Research - 29 Aug 2023