External Concerns to Check Gains

Stocks recovered on Tuesday, in line with firmer regional markets as investors were encouraged by diplomatic efforts from the U.S. and its allies to contain the crisis in Gaza. The KLCI rose 5.17 points to close at the day’s high of 1,444.13, off an early low of 1,438.95, as gainers edge losers 439 to 353 on total turnover of 2.68bn shares worth RM1.91bn.

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

Even as stocks edge higher, underlying caution over Middle East geopolitical risk and uncertainty over the interest rate hike should keep buyers in check. On the index, immediate overhead resistance remains at 1,450, with 1,465/1,470, and the 1,490/1,500 area acting as tougher upside hurdles. Immediate support stays s at 1,400, with 1,390 and the end June low of 1,370 acting as crucial supports.

Bargain Duopharma & Pharmaniaga

Duopharma shares will need confirmed breakout above the 50%FR (RM1.34) to extend uptrend towards the 38.2%FR (RM1.42), with higher upside targets at the 23.6%FR (RM1.50) and the peak of 27/12/22 (RM1.65) ahead. Uptrend support from the 76.4%FR (RM1.18) limits downside risk. Pharmaniaga needs convincing breakout above the 61.8%FR (51sen) to target the 76.4%FR (58sen), with the peak of 01/08/22 (69sen) as higher upside hurdles going forward. Key retracement supports from the 38.2%FR (40sen) and 23.6%FR (33sen) cushions downside.

Asian Markets Rise On Mideast Diplomacy Efforts

Asian markets rose on Tuesday, as traders were encouraged by diplomatic efforts from the U.S. prevent the Israel-Hamas war from expanding into a wider conflict. Joe Biden prepared for a trip to the Middle East aimed at preventing the Israel-Hamas conflict spilling over into a regional conflagration. The US president's trip comes as Israeli Prime Minister Benjamin Netanyahu lines up forces on the Gazan border ahead of an expected ground incursion as Tel Aviv retaliates after the deadly Oct 7 attacks by the militants. Separately, secretary of State Antony Blinken also returned to Israel to meet Prime Minister Benjamin Netanyahu, after talks with Arab governments.

On economic news, the Reserve Bank of Australia released the minutes from its October 3 monetary policy meeting. At the meeting, the RBA kept its key interest rate unchanged at 4.10 percent for a fourth time, but not before mulling another quarter point hike. Japan’s Nikkei 225 jumped 1.20% to 32,040.29, while the Topix added 0.82% to 2,292.08. In Australia, the S&P/ASX 200 closed 0.42% higher at 7,056.10, and South Korea’s Kospi index rose 0.98% to 2,460.17. Hong Kong’s Hang Seng index also rose 0.75% to 17,773.34, while Shanghai Composite Index added 0.32% to 3,083.50.

Wall Street Subdued as Hot Retail Data Weighs

Wall Street’s main indexes finished little changed in choppy trade as robust economic data suggested the Federal Reserve may keep policy tight for longer than expected. The Dow Jones Industrial Average ticked higher by 0.04% to close at 33,997.65. The S&P 500 finished the session essentially flat at 4,373.20, while the Nasdaq Composite slipped 0.25% to 13,533.75. The move on Wall Street came after data overnight showed retail sales rose 0.7% in September from the previous month, more than double Wall Street's estimates for 0.3% growth. The surprise reading reflects continued resilience in the American consumer despite predictions of a slowdown. The data has raised concerns the Federal Reserve will keep interest rates higher for longer. The yields on two-year Treasury notes rose to 17-year highs with five-year yield at 16-year peaks.

Market participants were also watching the humanitarian crisis arising from the Israel-Hamas conflict as Biden heads to the region. Bank of America advanced more than 2% on the back of a better-than-expected report. Bank of New York Mellon climbed nearly 4% after also beating analyst forecasts in the quarter. Beyond earnings, chip stocks including Nvidia and Advanced Micro Devices struggled in the session after the U.S. Department of Commerce announced plans to tighten restrictions on sales of advanced artificial intelligence chips to China.

Source: TA Research - 18 Oct 2023