Cautious Over Budget Tax and Global Growth Uncertainties

The local market remained in narrow range bound trade on Tuesday, with most investors sidelined amid Budget tax uncertainties and global growth and inflation worries. The FBM KLCI settled up 1.25 points at 1,420.01, after moving between opening low of 1,417.94 and high of 1,424.11, as losers beat gainers 545 to 401 on higher turnover of 3.22bn shares worth RM2.21bn.

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

Stocks should continue drifting sideways amid cautious trading sentiment with concerns over potential Budget tax proposals and global growth uncertainties. Immediate index support is retained at 1,400, with 1,390 and the end June low of 1,370 acting as stronger supports. Immediate overhead resistance is at 1,450, with 1,465/1,470, and the 1,490/1,500 area as tougher upside hurdles.

Bargain Axiata & CelcomDigi

Any weakness on Axiata shares toward the key support area at RM2.30 to 13/10/22 low (RM2.20) would be attractive to bargain for rebound upside towards the 23.6%FR (RM2.58), with the 200-day ma (RM2.76) as next hurdle. CelcomDigi will need breakout confirmation above the upper Bollinger band (RM4.51) to fuel upside momentum towards the 150%FP (RM4.68) and 161.8%FP (RM4.82) ahead, with uptrend support from the 200-day ma (RM4.21) cushioning downside.

Asian Markets Fell as Rate Angst Simmers

Stocks in Asia fell on Tuesday after hawkish signaling from the Federal Reserve stirred concerns the US central bank would continue to raise interest rates. U.S. Federal Reserve officials said that monetary policy will need to stay restrictive for "some time" to bring inflation back down to the Fed's 2% target. Still, the hawkish rhetoric from the Fed officials comes as an ongoing debate over another possible rate hike this year rages on. Fed funds futures traders are pricing in a 26% chance of a rate hike in November, and a 45% likelihood of an increase by December, according to the CME Group's Fed Watch Tool.

Traders also await key monthly US employment data later in the week for cues on the outlook for interest rates. Hong Kong’s Hang Seng Index dropped 2.69% to 17,331.22 in their return from a National Day holiday on Monday. In Australia, the S&P/ASX 200 traded down 1.28% to close at 6,943.4 after the central bank held rates at 4.10%, as expected by a Reuters poll. In Japan, the Nikkei 225 also dropped 1.64% to close 31,237.94, while South Korean and Chinese markets are closed for holidays.

Source: TA Research - 4 Oct 2023