Choppy on Fresh Middle East Tensions

Bursa Malaysia shares struggled for direction on Monday as firmer global oil prices sparked by renewed conflict in the Middle East was overshadowed by worries over taxes in the Budget 2024 proposals this Friday. The FBM KLCI ended flat at 1,417.26 (+0.38) after ranging between early high of 1,420.71 and low of 1,415.8, as losers beat gainers 500 to 343 on muted trade totaling 2.87bn shares worth RM1.78bn.

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

Trading should be choppy given fresh geopolitical tensions in the Middle East which should lift oil & gas related stocks, while the broader market extend range bound trade amid caution ahead of Budget day. On the index, immediate support is at 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 acting as tougher upside hurdles.

Bargain Globetronics & VSI

Globetronics need to rebuild support at current levels for eventual recovery above the upper Bollinger band (RM1.55) and aim for the 61.8%FR (RM1.63) and 76.4%FR (RM1.79) ahead, while the 38.2%FR (RM1.37), matching the 100-day ma, cushions downside. VSI will need breakout confirmation above the 50%FR (RM1.04) to fuel upside momentum towards the 61.8%FR (RM1.11) and 76.4%FR (RM1.19) going forward, while the 100-day ma (89sen) and 200-day ma (88sen) limits downside risk.

Asia Ended Mixed as Hong Kong Cancel Morning Session on Typhoon

Asian markets are mixed on Monday as China’s markets come back from a week-long Golden Week holiday. In Australia, the S&P/ASX 200 was up 0.23% to end at 6,970.2, snapping a fiveday losing streak. This comes after the index fell below the 7,000 mark for the first time since March on Friday. Hong Kong’s Hang Seng index added 0.2%, after trading was canceled for the morning session due to the city’s Signal 8 typhoon warning for Typhoon Koinu. That warning was downgraded, allowing the afternoon session to proceed at 2 p.m. Meanwhile, mainland Chinese markets weakened, with the benchmark CSI 300 index falling about 0.13% and closing at 3,684.73 after the Golden Week. Japan and South Korea’s markets are closed for a holiday. Investors will be watching inflation readings and trade data out from China and India later this week, as well as a monetary policy decision from Singapore’s central bank.

Wall Street End Higher as Investors Monitor Mideast Conflict

Wall Street's major indexes closed higher overnight while energy stocks rallied as investors digested the latest news about the conflict between Israel and the Palestinian Islamist group Hamas. Late in the afternoon, a senior Hamas official said the group is open to discussions over a possible truce with Israel. U.S. President Joe Biden said he directed his team to coordinate with regional partners to warn anyone seeking to take advantage of the situation. The Dow Jones Industrial Average was higher by 0.59%, or 197.07 points, to close at 33,604.65. The S&P 500 gained 0.63%, ending at 4,335.66. The tech-heavy Nasdaq Composite added 0.39%, landing at 13,484.24. The major indexes were down across the board earlier in the day. At session lows, the Dow had shed 153.89 points, while the S&P 500 lost 0.6%. The Nasdaq pulled back as much as 1.15% before recovering.

News of the conflict sparked an oil rally due to supply concerns. But stock indexes managed to reverse earlier declines with help of more dovish Federal Reserve official comments. Fed officials indicated that recent gains in yields on long-term U.S. Treasury bonds, which directly influence financing costs for households and businesses, could steer the Fed from further hikes in its short-term policy rate. WTI crude oil futures were up 4.3%, trading above USD86 per barrel, while International Brent futures rose 4.2% to USD88.14. All sectors ended Monday in the green, led by gains in energy and industrials, which closed higher by 3.5%, and 1.6%, respectively. Halliburton was the biggest energy winner, with the stock popping 6.8%, followed by ConocoPhillips. Along with oil and gas giants, major defence companies also jumped amid

the Middle East conflict. Lockheed Martin and Northrop Grumman Corp added 8.9% and 11.4%, respectively.

Source: TA Research - 10 Oct 2023