Cautious Sentiment to Persist

Stocks traded sideways on Monday, as lack of positive catalysts in the local front and concerns over the Israel-Hamas conflict in the Middle East continued to weigh on investor appetite. The FBM KLCI fell 2.92 points to settle at 1,438.12, after ranging between high of 1,443.86 and low of 1,435.05, as losers thrashed gainers 743 to 195 on total turnover of 3.37bn shares worth RM1.99bn.

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

The current cautious trading sentiment should persist as investors keep an eye on the ongoing geopolitical developments in the Middle East as well as the interest rate outlook from global central bankers. As for the index, immediate support remains at 1,400, with the 1,390, and the end June low of 1,370 acting as crucial supports. Immediate overhead resistance stays at

1,450, with 1,465/1,470, and the 1,490/1,500 area acting as tougher upside hurdles, going forward.

Bargain Dialog & Hibiscus

Dialog will need breakout confirmation above the 61.8%FR (RM2.40) to boost upside momentum towards the 76.4%FR (RM2.58), with next major resistance from the peak of 14/02/22 (RM2.85), and immediate supports at 23.6%FR (RM1.96) and 28/10/22 low (RM1.83).

Hibiscus needs decisive breakout above the 61.8%FR (RM2.97) to enhance upside potential towards the 76.4%FR (RM3.22), with stronger upside hurdle coming at the peak of 18/05/22 (RM3.62). Crucial chart supports at 38.2%FR (RM2.56) and 23.6%FR (RM2.31) limits downside risk.

Asian Markets Slip On Middle East Woes

Asian markets drifted lower on Monday as the risk of a wider conflict in the Middle East clouded sentiment in a week laden with data on U.S. growth and inflation as well as earnings from some of the world's largest tech companies. Israel has stepped up air raids on Gaza in preparation for the “next phase” of its conflict with Hamas, while also warning that Hezbollah risks dragging Lebanon into a wider regional war. Washington also warned over the weekend of a significant risk to U.S. interests in the region as ally Israel pounded Gaza and clashes on its border with Lebanon intensified. This week, traders will be parsing for clues on the outlook for global interest rates with inflation readings in Australia and Japan as well as economic activity data in the US and Europe.

Fed Chairman Jerome Powell is due to give remarks, while the European Central Bank and Bank of Canada hold policy meetings this week and, while no hikes are expected, investors will be sensitive to guidance on futures moves. In Australia, the S&P/ASX 200 closed 1.16% at 6,900.70. Japan’s Nikkei 225 closed 0.54% lower at 31,259.36, while the Topix ended 0.38% down at 2,255.65. South Korea’s Kospi dropped 1.69% to 2,375 at its close, while the Kosdaq was 1.89% lower at 769.25. In Hong Kong, the Hang Seng index fell 0.72% to 17,172.13 and the Shanghai Composite Index dropped 1.47% to 2,939.29.

Wall Street Mixed Ahead of Big Tech Earnings

Wall Street’s major indexes finished mixed overnight as traders shifted their focus to this week's high-profile earnings and economic data. The Dow Jones Industrial Average slipped 0.58% to close at 32,936.41. The S&P 500 fell 0.17% to 4,217.04, while the Nasdaq Composite added 0.27% to finish the session at 13,018.33. Traders looking to the earnings season for a dose of good news are hanging their hopes on big tech, with a slew of big tech titans set to report. Traders anticipate results from Alphabet, Amazon, Meta and Microsoft will provide key information for the stock market. Geopolitical turmoil is also on the radar, with market participants looking for potential signs the Israel-Hamas conflict could broaden or escalate.

Overall trading activity remained somewhat subdued, however, with a lack of major U.S. economic data likely keeping some traders on the sidelines. Traders are also likely to keep an eye on reports on new home sales, durable goods orders, pending home sales and initial jobless claims in the coming days. A steep drop by shares of Chevron weighed on the Dow, with the energy giant tumbling by 3.7% after announcing an agreement to acquire smaller rival Hess in an all-stock transaction valued at USD53 billion. Pharmacy giant Walgreens ticked up 3% following an upgrade from JPMorgan.

Source: TA Research - 24 Oct 2023