Bursa Malaysia shares stayed range bound on Monday with profit-taking on key property and construction stocks checking recent strong gains. The FBM KLCI eased 0.71 points to settle at 1,462.72, after ranging within early high of 1,465.93 and low of 1,460.84, as losers edged gainers 526 to 498 on total turnover of 4bn shares worth RM2.37bn.

Resistance at 1,464/1,470; Support at 1,440/1,433

The local market should continue to trade sideways due to profit-taking on recent strong gains on property and construction counters, pending fresh leads to sustain the positive sentiment. Immediate overhead resistance for the index remains at 1,464/1,470, with next tougher resistance seen at the 1,490/1,500 level, while immediate chart support cushioning downside will be at 1,440, then 1,433, and subsequently 1420/1,400.

Bargain Bumi Armada & Dialog Group

Bumi Armada shares need breakout confirmation above the 61.8%FR (57sen) to sustain recovery towards the 76.4%FR (63sen), with tougher hurdle from the 7/3/23 high (73sen), while retracement support from the 38.2%FR (47sen) cushions downside. Dialog Group will need to overcome the 50%FR (RM2.27) to improve upside momentum towards the 61.8%FR (RM2.41), with the 76.4%FR (RM2.58) as next target, and downside cushioned by the 23.6%FR (RM1.96).

Asian Markets Buoyed by China Stimulus

Asian markets closed higher on Monday as traders bet that China's latest property stimulus measures will aid the economy. China is taking bigger steps to showcase its policy determination after a slew of piecemeal measures to support the housing market failed to halt a slide. The latest changes included lowering the minimum down payment and easing mortgage restrictions for some homebuyers at mega-cities including Beijing. Home sales soared in the biggest cities over the weekend following the relaxation of mortgage rules, according to several local media reports Monday. Separately, traders will look to key data from Australia and China later in the week, such as the Reserve Bank of Australia’s rate decision on Tuesday, while China is expected to release its trade balance for August on Thursday and its inflation rate next weekend.

Meanwhile, data showing an increase in the unemployment rate in the U.S. has also added to optimism the Federal Reserve will leave interest rates unchanged later this month, but traders continued to express some uncertainty about future meetings. Hong Kong’s Hang Seng index jumped 2.51% to 18,844.16, and the Shanghai Composite added 1.40% to 3,177.06. Japan’s Nikkei 225 also climbed 0.7% to close at 32,939.18, marking a six-day winning streak and its highest level in over a month. The Topix finished 1.02% higher at 2,373.73, also marking six straight days of gains. In Australia, the S&P/ASX 200 rebounded to 0.56% and ended at 7,318.8, while South Korea’s Kospi traded 0.81% up to end at 2,584.55.

Europe Closes Flat as Traders Digest Economic Data

Major European markets failed to hold gains and closed lower overnight as traders digest economic data from the region and looked ahead to monetary policy decisions of major central banks. The pan European Stoxx 600 edged down 0.04%. The U.K.'s FTSE 100 ended down 0.16%, Germany's DAX slipped 0.1% and France's CAC 40 lost 0.24%, while Switzerland's SMI declined 0.19%. In economic releases, a survey showed the Eurozone Sentix Investor Confidence Index fell to -21.5 in September from -18.9 in August, a level not seen since Europe's energy crisis last November. Separate data showed that Germany's trade surplus declined more than expected in July on weak exports and rising imports, exacerbating the possibility of economic contraction in the third quarter.

German inflation and euro zone gross domestic product numbers due later in the week will act as major tests of the European economy's health ahead of the European Central Bank's policy meeting on Sept. 14. Meanwhile, the head of the European Central Bank, Christine Lagarde said it was critical for policymakers to keep inflation expectations firmly anchored. The market is now leaning against a hike at its September meeting after a run of soft data. A holiday in the United States kept a lid on activity ahead of key readings on U.S. services and Chinese trade and inflation later this week.

Source: TA Research - 5 Sept 2023