Property and construction stocks dragged the broader market lower on Tuesday, as overbought conditions led to profit-taking which pulled prices off recent highs. The FBM KLCI dipped 7.89 points to close at 1,454.83, off an opening high of 1,462.58 and low of 1,452.48, as losers swarmed gainers 689 to 309 on trade totaling 4.09bn shares worth RM2.39bn.

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

Stocks should stay range bound for profit-taking consolidation to neutralize overbought momentum on recent strong gainers, and pending fresh leads to sustain positive sentiment. Immediate index support cushioning downside will be at 1,440, then 1,433, with stronger subsequent support at 1420/1,400, while overhead resistance remains at 1,464/1,470, with next tougher resistance seen at the 1,490/1,500 level.

Bargain Maxis & TM

Maxis shares need breakout confirmation above the 76.4%FR (RM4.18) to enable re-test of the 16/6/23 high (RM4.50), with next major resistance seen at the 123.6%FP (RM4.91), and key retracement support at 50%FR (RM3.78) cushioning downside. TM should see profittaking resistance at the 61.8%FR (RM5.36) and 76.4%FR (RM5.57) capping upside potential, while downside risk is restricted to the 23.6%FR (RM4.82).

Asian Markets Slip On Weak Economic Data

Asian markets ended lower Tuesday as traders digested weaker e economic data from the region ahead of central bank’s rate decision. A private-sector survey showed on Tuesday China's services activity expanded at the slowest pace in eight months in August as weak demand continued to dog the world's second-largest economy and stimulus failed to meaningfully revive consumption. Separately, South Korea’s inflation accelerated much faster than estimates in August on the back of higher energy costs, reinforcing the case for the central bank to keep the door open to further policy tightening to rein in prices. Meanwhile, Australia’s central bank held its benchmark policy rate at 4.1% for the third straight month in a row and in line with expectations from economists polled by Reuters.

Traders also looked ahead to monetary policy decisions of major central banks, including the US Federal Reserve, Bank of England and the European Central Bank. Markets are pricing in 93% chance of the Fed keeping rates unchanged later this month, CME Fed Watch tool showed, and has priced in about 60% chance of no more hikes this year. Hong Kong’s Hang Seng index fell 2.06% to 18,456.91 dragged by health-care and real estate stocks, while Shanghai Composite Index lost 0.71% to 3,154.37. South Korea’s Kospi also slid 0.09% to finish at 2,582.18, while Australia’s S&P/ASX 200 fell 0.24% to 7,301.30. However, Japan’s Nikkei 225 reversed losses and gained 0.30%, closing at 33,036.76.

Wall Street Ends Lower Amid Rising Oil Prices

Wall Street's main indexes fell overnight, weighed down by a jump in crude oil prices and weak service sector data from China and Europe. The Dow Jones Industrial Average lost 0.56% to finish at 34,641.97. The S&P 500 dropped 0.42% to close at 4,496.83, while the Nasdaq Composite edged down 0.08% to settle at 14,020.95. Russia and Saudi Arabia surprised many investors by curtailing output through the end of the year, pushing oil prices to their highest levels of 2023. Benchmark U.S. crude gained more than 1.3%, to close at USD86.69 a barrel. Separately, a private-sector survey showed that China's services activity expanded at the slowest pace in eight months in August as weak demand continued to dog the world's second-largest economy. Data from the euro area and Britain also showed a decline in business activity in August.

Treasury yields also popped, straining risk assets. The yield on the 10-year Treasury surged nearly 9 basis points to 4.262%. With a light earnings and economic calendar ahead, the focus will likely stay on the Fed this week, when traders looking at seasonal forces in play for stocks may well find fewer reasons to be cheerful. September has historically been a downbeat month for markets. Shares of Halliburton and Occidental Petroleum each added more than 2%, while EOG Resources rose 1.8%. The uptick in oil pressured airline and cruise stocks, with American Airlines, United Airlines, Delta Air Lines and Carnival shed more than 2%.

Source: TA Research - 6 Sept 2023