Lower on Budget Tax and Global Growth Worries

Bursa Malaysia shares dropped further on Monday, dragged down by profit-taking in key utility, plantation, property and construction stocks. The FBM KLCI fell 5.41 points to end at the day’s low of 1,418.76, off an early high of 1,428.04, as losers swarmed gainers 632 to 285 on total turnover of 3.01bn shares worth RM1.8bn.

Lower Supports at 1,400/1,390; Resistance at 1,450/1,465

The local market should drift sideways to lower on bearish technical indicators and weak trading sentiment amid Budget tax concerns and growth worries as global growth momentum deteriorates. Immediate index support is reset lower to 1,400, with 1,390 and the end June low of 1,370 acting as stronger supports. Immediate overhead resistance is retained at 1,450, with 1,465/1,470, and the 1,490/1,500 area as tougher upside hurdles.

Bargain AMBank & CIMB

AMBank remains in base building mode above the 61.8%FR (RM3.65) support, pending decisive breakout above the 76.4%FR (RM3.82) to enhance upside potential for re-test of the 14/12/22 peak (RM4.09), with next key hurdle from the 123.6%FP (RM4.36). Further weakness on CIMB shares towards key retracement support from the 76.4%FR (RM5.27) or 200-day ma (RM5.20) would be very attractive to bargain for rebound upside towards the 20/9/23 high (RM5.64), with next key resistance seen at the 123.6%FP (RM5.90).

Asian Markets Fall Ahead of Jerome Powell Speech

Asian markets fell in slim holiday trading on Monday, as traders react to the U.S. narrowly avoiding a government shutdown amid a last-minute temporary agreement reached by the legislators. The weekend's last-minute stopgap funding bill allowed the government to keep operating through Nov. 17, and means key data releases including Friday's monthly payrolls report can go ahead on time. While markets are gaining some relief from the US deal, attention will quickly shift to Federal Reserve Chief Jerome Powell as he speaks in a discussion later Monday. US manufacturing activity and jobs data will also be in the spotlight this week after the head of the New York Fed said Friday policymakers should leave interest rates high for some time.

On economic news, China’s factory activity in September expanded for the first time since April, according to official data over the weekend. Sentiment of Japan’s big manufacturers improved to a score of 9 in the third quarter, up from 5 in the previous three months, the closely-watched central bank Tankan survey showed. Trading was also thinned by a market holiday in Hong Kong, South Korea, and China. In Japan, the Nikkei 225 dropped 0.31% to 31,759.88, while the Topix fell 0.39% to 2,314.44. In Australia, the S&P/ASX 200 fell 0.22% 7,033.20.

Wall Street Mixed Amid Shutdown Reprieve

Wall Street’s major indexes finished mixed overnight after Republicans and Democrats set aside policy differences over the weekend to avoid a government shutdown. The Dow Industrial Average fell 0.22% to 33,433.35. The S&P 500 ended nearly flat at 4,288.39, while Nasdaq Composite gained 0.67% to close at 13,307.77. In a surprise turnabout, Congress on Saturday sealed a last-second deal to sidestep a shutdown that had seemed all but inevitable. That brought some relief to investors concerned by the threat of significant harm to the economy and stock market. As the agreement brought just a temporary extension to the budgetary wrangling, the relief could be just as short-lived.

Meanwhile, concerns about the outlook for interest rates continued to hang over the markets ahead of the release of the Labor Department's closely watched monthly jobs report on Friday. On the U.S. economic front, the Institute for Supply Management released a report showing a modest slowdown in the pace of contraction in U.S. manufacturing activity in the month of September. A separate report released by the Commerce Department showed construction spending in the U.S. increased in line with economist estimates in the month of August.

Source: TA Research - 3 Oct 2023