Profit-Taking Consolidation to Prevail

Property and construction stocks extended profit-taking consolidation on Tuesday, but were lifted off lows on bargain hunting interest, which spilled over to the oil & gas sector. The FBM KLCI slipped 1.65 points to close at 1,453.39, off the opening high of 1,454.32 and low of 1,447.96, as losers beat gainers 524 to 354 on total turnover of 2.88bn shares worth RM1.99bn.

Supports at 1,440/1,433; Resistance at 1,465/1,470

Range bound trading should persist as profit-taking consolidation on the property and construction sectors prevail pending fresh leads, while oil & gas related stocks bounce back on rotational plays. Immediate index support remains at 1,440, followed by 1,433, with subsequently 1420/1,400 acting as stronger supports. Immediate overhead resistance will be at 1,465, then 1,470, with the 1,490/1,500 levels as higher resistance.

Bargain DNEX & Hibiscus

DNEX remains in base building mode, pending decisive breakout above the 200-day ma (53sen) to boost upside momentum towards the 76.4%FR (59sen), and tougher resistance from 64sen and 69sen ahead, with downside risk capped by the lower Bollinger band (42sen) and 30/5/23 low (37sen). Hibiscus needs sustained strength above the 38.2%FR (RM1.03) to support further upside towards the 50%FR (RM1.11) and 61.8%FR (RM1.19) going forward, while the 23.6%FR (93sen) and 5/7/23 low (85sen) provide key chart supports.

Asian Markets Subdued Ahead of Key Economic Data

Asian markets struggled to gain traction on Tuesday, as traders look for further signs about the Federal Reserve’s policy outlook ahead of key US data. Traders remain cautious while they await a slew of key economic data from the U.S., Europe and China later in the week, which could have a significant impact on the outlook for interest rates. The CME Group's FedWatch Tool is currently indicating a 93.0 chance the Fed will leave interest rates unchanged next week, but indicating a 42.5% chance of another quarter point rate hike in November. In Europe, traders are gearing up for the European Central Bank’s next rate decision Thursday. The market is pricing in a roughly 40% chance the central bank will hike 25 basis points to 4.00%, but economists predict it will be a close call, Reuters reported.

Meanwhile, Fed insider Nick Timiraos said the central bank is likely to pause its recent series of rate hikes next week then take a "harder look at whether more are needed." South Korea’s Kospi slipped 0.79% to end at 2,536.58, and the Kosdaq finished 1.59% lower at 898.04, the lowest level in two weeks. In mainland, the Shanghai Composite Index fell 0.18% to 3,137.06, and Hong Kong’s Hang Seng index fell 0.29% to 18,044.78. In Japan, the Nikkei 225 rose 0.95% to 32,776.37, while Australia’s S&P/ASX 200 closed 0.20% higher at 7,206.90.

Tech Stocks Weigh On Wall Street

Wall Street’s main indexes finished lower overnight as software giant Oracle helped lead the losses for tech stocks, while traders awaited key inflation readings later this week for clues on the Federal Reserve's interest-rate path. The Nasdaq slid 1.04% to 13,773.61. The S&P 500 dropped 0.57% to 4,461.90. Meanwhile, the Dow Jones Industrial Average fell 0.05% to 34,645.99. A steep drop by shares of Oracle weighed on the tech-heavy Nasdaq, with the software giant plunging by 13.5% after the cloud services company forecast weaker-thanexpected current quarter revenue, hinting at a broader softening of demand. The lower close on Wall Street came as traders look ahead to the release of the Labor Department's highly anticipated report on consumer price inflation on late Wednesday. The inflation data could have a significant impact on the outlook for interest rates ahead of the Federal Reserve's monetary policy meeting next week.

Ahead of the data, CME Group's Fed-Watch Tool is currently indicating a 93% chance the Federal Reserve will leave interest rates unchanged next week. Elsewhere, U.S. crude prices touched the highest level since November of last year as OPEC on Tuesday kept to a robust demand growth forecast this year and next. Apple shares were lower by 1.7% after the unveiling of a new iPhone model this afternoon. Meanwhile, Adobe shares also dropped about 4% ahead of the company’s earnings results this week. Other cloud competitors including Amazon, Google-parent Alphabet and Microsoft also slid.

Source: TA Research - 13 Sept 2023