Choppy Trade on External Uncertainties

Bursa Malaysia shares ended softer on range bound trade Wednesday, with most investors sidelined and cautious ahead of the release of the U.S. inflation figures that may give a better guide on the path for Federal Reserve interest rates. The KLCI inched higher by 0.15 points to close near the session high of 1,453.54, off an early low of 1,444.81, as losers led gainers 480 to 405 on reduced turnover of 2.51bn shares worth RM1.88bn.

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

Trading should remain choppy and in a tight range amid weak buying support as nagging doubts about inflation and concerns over the path of interest rates continued to weigh on investor appetite. Immediate index support stays at 1,440, followed by 1,433, with subsequently 1420/1,400 acting as stronger supports. Immediate overhead resistance remains at 1,465, then 1,470, with the 1,490/1,500 levels as higher resistance.

Bargain Aemulus & Globetronics

Aemulus is still in base building mode, pending breakout confirmation above the 200-day ma (38sen) to target the 38.2%FR (45sen) and 50%FR (50sen) ahead, while the lower Bollinger band (30sen) and 12/5/23 low (29sen) limit downside risk. Globetronics will need to overcome significant resistance from the 61.8%FR (RM1.63), matching the upper Bollinger band, to aim for the 76.4%FR (RM1.79) and 27/9/21 high (RM2.04) going forward, while the 50-day ma (RM1.45) and 100-day ma (RM1.30) cushions downside.

Asian Markets Fall Ahead of U.S. CPI

Asian markets fell across the board Wednesday, following the broadly negative cues from Wall Street overnight, as traders looked ahead to key U.S. inflation data, which could provide clues regarding the way forward for the U.S. Federal Reserve's monetary policy. At the forefront of market participants' minds is the crucial Consumer Price Index (CPI) report expected on late Wednesday, which should shed further light on the meandering, downward path of inflation and provide some clarity regarding the direction of key interest rates. While core CPI is seen cooling, rising fuel costs are forecast to result in hotter headline inflation, which is unlikely to escape the Fed's attention. Inflation fears due to the continued spike in crude oil prices also weighed on sentiment.

On economic news, South Korea’s unemployment rate in August came in at 2%, its lowest since June 1999. Meanwhile, corporate confidence in Japan fell in September, among both manufacturers and non-manufacturers, according the Reuters Tankan poll. South Korea’s Kospi fell 0.07% to end at 2,534.70, while Australia’s S&P/ASX 200 slipped 0.74% to 7,153.90. In mainland, the Shanghai Composite Index fell 0.45% to 3,123.07, and Hong Kong’s Hang Seng index fell 0.09% to 18,009.22. In Japan, the Nikkei 225 dropped 0.21% to 32,706.52 and the Topix slipped 0.05% to 2,378.64.

Wall Street Mixed as Traders Digest Inflation Data

Wall Street’s main indexes churned to a mixed finish after a highly anticipated report showed inflation accelerated across the country last month, but not by much more than expected. The Dow Industrial Average lost 0.20% to 34,575.53 for its second straight decline. Meanwhile, the S&P 500 rose 0.12% to 4,467.44, while the Nasdaq Composite added 0.29% to 13,813.59. The choppy trading on Wall Street came following the release of the Labor Department's report on consumer price inflation in the month of August. Consumer prices edged higher in August as a surge in oil prices contributed to an uptick in headline inflation, according to the latest data from the Bureau of Labor Statistics released overnight. While the data reinforced expectations the Federal Reserve will leave interest rates unchanged next week, many economists feel the slightly bigger-than-expected monthly increase in core prices leaves the door open for another rate hike before the end of the year.

In Europe, official figures showed the U.K. economy contracted by 0.5% in July. Economists in a Reuters poll had signaled a 0.2% fall. 3M was the biggest laggard in the 30-stock Dow, dropping more than 5.7%. Caterpillar shares were lower by 2%. Meanwhile, Apple shares declined more than 1%, falling for a second day. On the other hand, tech gains helped to lift the S&P 500 and Nasdaq. Tesla shares gained 1.4% after billionaire investor Ron Baron stood by his bullish thesis on the electric vehicle maker. Moderna was among the S&P 500’s best performers Wednesday, advancing 3.2%, after the drug maker said it expects USD10 billion to USD15 billion in additional annual revenue by 2028 thanks to new products.

Source: TA Research - 14 Sept 2023