Overnight US Rebound to Revive Local Market

The local market drifted lower on Monday, copying regional weakness as the escalating situation in the Middle East influences investor sentiment. The FBM KLCI fell 5.18 points to close at 1,438.96, off an early high of 1,446.06 and low of 1,436.50, as losers beat gainers 597 to 284 on total turnover of 3.08bn shares worth RM1.92bn.

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

The overnight rebound on Wall Street should revive the local market today, but undertone remains cautious as Middle East concerns persist. On the index, immediate overhead resistance stays at 1,450, with 1,465/1,470, and the 1,490/1,500 area acting as tougher upside hurdles. Immediate support remains at 1,400, with 1,390 and the end June low of 1,370 acting as crucial supports.

Bargain Aemulus & DNEX

Any further weakness on Aemulus towards 25sen would aggravate oversold condition and encourage technical rebound ahead, with resistance from the 61.8%FR (38sen) and 50%FR (50sen), going forward. Similarly, DNEX looks attractive to bargain on dips for recovery to the 09/05/23 high (53sen) with a confirmed breakout to target the 76.4%FR (59sen) ahead, while key supports are at the pivot low of 30/05/23 (37sen) and 30sen.

Asian Markets Slip On Middle East Conflict Fears

Asian markets fell on Monday Thursday, as traders kept an eye on developments in the conflict in the Middle East between Israel and Hamas and look ahead to key economic data from the region. The Israeli-Hamas war has sharpened focus on rising geopolitical risks for financial markets, as investors wait to see if the conflict draws in other countries with the potential to drive up oil prices further and deal a fresh blow to the world economy. On economic front, China will release its third-quarter gross domestic product numbers on Wednesday, while Japan’s September inflation data is expected on Friday, which will come ahead of the country’s central bank’s monetary policy meeting on Oct. 30 and 31.

South Korea’s central bank will also announce its rate decision on Thursday. The Bank of Korea has held rates steady for five meetings in a row at 3.5% since February. In Australia, the S&P/ASX 200 fell 0.35% to 7,027.90, while South Korea’s Kospi index ended the session with falls of 0.81% at 2,436.24. Japan’s Nikkei 225 closed 2.03% lower at 31,659.03, while the Topix dropped 1.53% to 2,273.54. Meanwhile, Hong Kong’s Hang Seng index fell 0.97% to 17,640.36, while Shanghai Composite Index lost 0.46% to 3,073.81.

Wall Street Ends Sharply Higher On Earnings Optimism

Wall Street’s main indexes finished sharply higher overnight, as traders were optimistic about the start of earnings season and hopes that the Israel-Hamas conflict wouldn’t have a major impact on the global economy. The Dow Jones Industrial Average rose 0.93% to close at 33,984.54. The S&P 500 climbed 1.06% to end the day at 4,373.63, while the Nasdaq Composite added 1.20% to 13,567.98. The strength on Wall Street partly reflects optimism about the strength of corporate results as earnings season starts to pick up steam. Brokerage Charles Schwab rallied 4.7% after surpassing Wall Street expectations for earnings per share in the third quarter. Pfizer shares gained 3.6% after the pharma giant slashed its 2023 revenueguidance range and Wall Street analysts believe cost cuts and new drug launches could still drive growth, prompting the upswing in the stock.

Third-quarter earnings for S&P 500 companies are estimated to have increased 2.2% yearover-year, according to LSEG data. Wall Street also braced for heightened geopolitical tensions as the US attempted to advance efforts to contain the Israel-Hamas conflict. President Joe Biden considering a trip to Israel as part of a push to prevent the war from spreading. Secretary of State Antony Blinken also returned to Israel to meet Prime Minister Benjamin Netanyahu, after talks with Arab governments. Nike and Travelers Companies led the Dow higher with advances of around 2.1%. All 11 S&P 500 sectors traded higher in the session.

Source: TA Research - 17 Oct 2023