Property & Construction Stocks Stay Buoyant

Blue chips were softer and stuck in range bound trade on Thursday, as concerns over sticky inflation globally and uncertain outlook on interest rates kept investors sidelined. The FBM KLCI slid 3.96 points to close at 1,449.58, off an early low of 1,445.31 and high of 1,455.09, as gainers led losers 530 to 342 on improved turnover totaling 2.96bn shares worth RM2.2bn.

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

While blue chips should stay range bound amid lacking leads ahead of the weekend, positive anticipation for project announcements should lift property and construction stocks. 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 MRCB & UEM Sunrise

MRCB will need to overcome the 123.6%FP (48sen) to fuel upside momentum towards the 138.2%FP (51sen), 150%FP (53sen) and 161.8%FP (55sen) ahead, while the 30-day ma (42sen) and 76.4%FR (40sen) limit downside risk. UEM Sunrise need sustained strength above the 150%FP (69sen) to enhance upside potential and target the 161.8%FP (73sen), 176.4%FP (79sen) and 200%FP (87sen) going forward, while the rising 30-day ma (63sen) and lower Bollinger band (60sen) cushion downside.

Asian Markets Climb as Traders Shrug Off Inflation Data

Asian markets rose on Thursday, as traders figured a small upside surprise for U.S. inflation was unlikely to push up interest rates and turned their focus to a European Central Bank meeting later in the session. Overnight U.S. data showed higher fuel prices had lifted headline U.S. consumer prices by the most in 14 months in August, for an annual rate of 3.7% which was a touch above expectations. Core inflation slowed to an annual 4.3%, as expected. Fed funds futures hardly budged on the inflation data, and imply nearly no chance of a rate hike next week, and about a 45% chance of another hike by year's end. Meanwhile, evidence is building that Europe is facing persistent cost pressures that have been made worse by soaring energy prices. Money markets are pricing in a two-thirds chance the ECB raises interest rates by a quarter of a percentage point, a rapid shift from earlier this month where traders were firmly in the camp rates would be held steady.

In Australia, the S&P/ASX 200 rose 0.46%, closing at 7,186.5 as unemployment numbers in August held steady at 3.7%, matching analysts’ forecasts. South Korea’s Kospi advanced 1.51% to close at 2,572.89 and the Kosdaq was 1.61% higher at 899.47, snapping a three-day losing streak. Japan’s Nikkei 225 was 1.41% up and ended at 33,168.1, breaking above the 33,000 mark for the second time in over two months. The Topix saw a smaller gain of 1.13% and finished at 2,405.57. Hong Kong’s Hang Seng index rose 0.21% to 18,047.92, and the Shanghai Composite Index added 0.11% to 3,126.55.

Wall Street Rallies on Robust Economic Data

Wall Street’s main indexes finished sharply higher overnight as robust economic data failed to budge expectations that the Federal Reserve will leave its key interest rate unchanged next week. The Dow Industrial Average rose 0.96% to 34,907.11. The S&P 500 gained 0.84% to 4,505.10, while the Nasdaq Composite added 0.81% to 13,926.05. The strength on Wall Street partly reflects a positive reaction to a slew of U.S. economic data, including a Commerce Department report showing retail sales in the U.S. increased by much more than expected in the month of August. A separate report released by the Labor Department showed producer prices in the U.S. increased by more than expected in month of August. Nonetheless, the data does not seem to have raised concerns about inflation, as the increase in producer prices was largely due to a spike in energy prices.

Financial markets have baked in a 97% likelihood of the Fed holding the fed funds target rate steady at 5.25%-5.50% at the conclusion of next week's monetary policy meeting, and a growing 63.6% chance of holding firm at the November meeting to follow, according to CME's Fed Watch tool. In Europe, the European Central Bank hiked its key interest rate to a record high, but also hinted that this latest increase would be its last. British chipmaker Arm (ARM) jumped more than 25% on its first day of trading and spark excitement for the IPO market.

Source: TA Research - 15 Sept 2023