Property & Construction Stocks in Play on Policy or Contract Hopes

Bursa Malaysia blue chips were mostly range bound on Monday with investors sidelined pending clearer cues from global central bankers on the direction of interest rates, but lower liner construction and property stocks were actively traded on policy or contract speculations. The FBM KLCI ended down 1.04 points at 1,457.99, off an early low of 1,452.86 and high of 1,458.46, as losers edged gainers 498 to 468 on total turnover of 3.38bn shares worth RM2.12bn.

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

Blue chips are likely to extend sideways consolidation pending clearer external leads, while lower liner property and construction stocks continue to attract trading interest on hopes for policy or contract announcements. Immediate overhead resistance for the index stays at 1,465, then 1,470, with the 1,490/1,500 area as next resistance, while immediate support cushioning downside is still at 1,440, followed by 1,433, with subsequently 1420/1,400 acting as stronger supports.

Bargain Gamuda & Sime Darby

Gamuda need decisive breakout above the upper Bollinger band (RM4.56) to fuel further upside towards the 123.6%FP (RM4.72) and 138.2%FP (RM5.00) ahead, while uptrend supports are at the 100-day ma (RM4.28) and 200-day ma (RM4.06). Sime Darby need breakout confirmation above the 25/3/22 peak (RM2.27) to target the 123.6%FP (RM2.39) and 138.2%FP (RM2.46) going forward, while the 200-day ma (RM2.07) cushions downside.

Asian Markets Falter Ahead of Central Bank Meetings

Asian markets slipped on Monday as traders looked ahead to a week packed with central bank meetings including the Federal Reserve and the Bank of Japan, which will be closely scrutinized for the global monetary policy outlook. This week, global central banks will take center stage, with five of those overseeing the 10 most heavily traded currencies, including the U.S. Federal Reserve holding rate-setting meetings, plus a swathe of emerging market ones as well. Markets are fully priced for a pause from the Fed on Wednesday, so the focus will be on the updated economic and rates projections, as well as what Chair Jerome Powell says about the future. They see about 80 basis points of cuts next year. Bank of Japan is the key risk event on Friday. Markets are looking for any signs that the BOJ could be moving away from its ultra-loose policy faster than previously thought, after recent comments by Governor Kazuo Ueda sent yields much higher.

Elsewhere, the People’s Bank of China is also expected to release its loan prime rate decisions on Friday. Tech shares across the region retreated, with a gauge of the sector’s stocks set to post its biggest decline in almost a month. In Australia, the S&P/ASX 200 started the week down 0.67% and closing at 7,230.4, while South Korea’s Kospi also fell 1.02% and ended at 2,574.72 and the Kosdaq slumped 0.86% to 891.29. Hong Kong’s Hang Seng index slid 1.39% to 17,930.35, while mainland Chinese markets bucked the wider sell-off and rose 0.26% to 3,125.93. Japan’s markets are shut for a holiday.

Wall Street Subdued Ahead of Fed Meeting

Wall Street’s main indexes closed little changed overnight as market participants looked ahead to the U.S. Federal Reserve's meeting scheduled for later in the week. The Dow Jones Industrial Average advanced 0.02%, to end at 34,624.30. The S&P 500 inched higher by 0.07% to 4,453.53, while the Nasdaq Composite ended nearly flat at 13,710.24. The choppy trading on Wall Street came as traders seemed reluctant to make significant moves ahead of the Federal Reserve's monetary policy announcement on Wednesday. The Fed is widely expected to leave interest rates unchanged, but traders will pay close attention to the accompanying statement and the central bank's projections for clues about the outlook for rates. Traders are assigning a 99% chance that the central bank stays put when it releases its rate decision, according to the CME Group’s Fed Watch tool.

Fed officials will also release projections showing where they think rates will go over the next few years. Likewise, Nvidia ticked up 0.2% and Apple climbed 1.7%, making it one of the S&P 500’s biggest gainers. The vaccine maker Moderna led laggards, shedding 9.1%, after Pfizer’s finance chief predicted weaker demand for Covid shots this year. Energy shares, buoyed by rising crude prices gained the most of the 11 major sectors of the S&P 500, while consumer discretionary stocks suffered the biggest percentage drop, with Tesla Inc weighing heaviest.

Source: TA Research - 19 Sept 2023