Downward Bias on Tax and Interest Rate Worries

Stocks ended lower on Wednesday, as investors further took profits following Wall Street’s overnight fall as weaker economic data raised recession worries, and concerns over capital gains taxes in the coming Budget kept investors sidelined ahead of a local religious public holiday. The FBM KLCI slid 5.44 points to close at 1,440.11, off an early low of 1,436.75 and high of 1,441.87, as losers beat gainers 572 to 341 on lower turnover of 2.97bn shares worth RM1.94bn.

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

The local market should continue trading sideways with downward bias ahead of the weekend, with worries over taxes in the coming Budget and global interest rates stuck at higher levels discouraging investor commitments. Immediate index support cushioning downside remains at 1,440, followed by 1,433, with subsequently 1420/1,400 acting as stronger supports. Immediate overhead resistance stays at 1,465, then 1,470, with the 1,490/1,500 area as next resistance.

Bargain Bumi Armada & Hibiscus

Bumi Armada need to sustain above the 61.8%FR (57sen) to enhance recovery potential towards the 76.4%FR (63sen), with next major upside hurdle seen at the 7/3/23 peak (73sen), while key retracement support at the 50%FR (52sen) cushions downside. Hibiscus will need to climb above the 50%FR (RM1.10) decisively to boost upside momentum towards the 61.8%FR (RM1.18) and 76.4%FR (RM1.28) ahead, while the 38.2%FR (RM1.02) and 200-day ma (99sen) limit downside risk.

Asian Market Slip on Inflation Worries

Stocks in Asian markets fell on Thursday as fears of higher interest rates and surging crude prices dented investor sentiment in the region. The US benchmark oil price hit USD95 a barrel for the first time in more than a year after stockpiles fell at a major storage hub. The rise in prices has fueled speculation of USD100 per barrel oil in the coming months. The increase added to concerns that inflation would remain elevated, keeping the 10-year Treasury yield near the 4.6% it reached in the previous session, the highest since 2007. Rising concerns about interest rates and the outlook for global economic growth also weigh on the markets. Meanwhile, Fed Chair Jerome Powell and a handful of other central bank officials are set to speak later Thursday.

On economic news, seasonally adjusted retail sales in Australia climbed 0.2% in August compared to the prior month. Data on the docket for release include US gross domestic product and initial jobless claims ahead of the personal consumption expenditures price on Friday, the Fed’s preferred inflation gauge. In Japan, the Nikkei 225 dropped 1.54% to 31,872.52, while the Topix lost 1.43% to 2,345.51. In Australia, the S&P/ASX 200 fell 0.08% to 7,024.80, while South Korea’s Kospi closed nearly flat at 2,465.07. In mainland, the Shanghai composite also finished flat at 3,108.30, and the Hong Kong’s Hang Seng index dropped 1.36% to 17,373.03.

Wall Street Ticks Higher as Traders Digest Fresh Economic Data

Wall Street three major indexes finished slightly higher as traders assessed the latest batch of economic data ahead of a key inflation report. The Dow Jones Industrial Average rose 0.35% to 33,666.34. The S&P 500 added 0.59% to 4,299.70, while the Nasdaq Composite climbed 0.83% to 13,201.28. Data showed the U.S. economy maintained a fairly solid pace of growth in the second quarter. Separate readings showed initial jobless claims rose slightly last week and a higher-than-expected fall in contracts to buy existing homes in August. Traders will turn their attention to the latest personal consumption expenditures price index reading due late Friday. Traders were also watching developments in Washington to see whether U.S. lawmakers could avert a government shutdown.

In Washington, the Democratic-led U.S. Senate forged ahead with a bipartisan stopgap funding bill aimed at averting a fourth partial government shutdown in a decade. The House of Representatives prepared to vote on partisan Republican spending bills with no chance of becoming law. The communication services sector jumped 1.2% to lead the S&P 500 higher, boosted by a 2% gain in Meta Platforms. Intel and Cisco Systems rose 1.6% and 1.3%, respectively, lifting the Dow. Shares of Micron fell more than 4% after the chipmaker said its first-quarter loss would be wider than previously forecast.

Source: TA Research - 29 Sept 2023