Sideways Pending Monetary Policy Updates

Blue chips stayed range bound Tuesday but ended near highs on late afternoon bargain-hunting interest while the broader market closed mixed. The FBM KLCI rose 2.94 points to settle at 1,442.14, off an early low of 1,437.98 and high of 1,443.46, as gainers edged losers 410 to 398 on a total turnover of 2.99bn shares worth RM1.85bn.

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

Stocks should extend sideways trade pending policy updates from key global central bankers and Bank Negara’s monetary policy meeting. Immediate overhead resistance for the index remains at 1,450, with 1,465/1,470 and the 1,490/1,500 area acting as tougher upside hurdles. Immediate support stays at 1,400, followed by 1,390, with the end-June low of 1,370 acting as crucial support.

Bargain Supermax & Top Glove

Supermax needs breakout confirmation above the 200-day ma (83sen) to enable the upside challenge of previous peaks of 89sen and 96sen, while stronger chart supports are at 75sen and 70sen. Top Glove remains on a base-building path, pending renewed strength above the 50-day ma (77sen) to aim for the 100-day ma (83sen) or 200-day ma (89sen), while the downside is limited to the lower Bollinger band (70sen).

Asian Markets Mixed on Weak China Data

Asian markets ended mixed on Tuesday as traders reacted to some downbeat Chinese manufacturing and non-manufacturing activity data. China's manufacturing activity unexpectedly contracted in October, underlining the daunting task facing policymakers as they try to revitalize economic growth heading into the end of the year and 2024 amid multiple challenges at home and abroad. Meanwhile, traders’ focus this week will mainly be on the major central bank meetings, with the U.S. Federal Reserve and Bank of England also due to meet along with BOJ. The Bank of Japan will conclude its two-day policy meeting later in the day, with investors watching for signs of the central bank raising its inflation forecasts.

The Fed's meeting comes after a slew of data showed the U.S. economy remains resilient and comments from Fed Chair Jerome Powell will be scrutinized to gauge how long interest rates are likely to stay elevated. Hong Kong’s Hang Seng index dropped 1.71% to 17,109.38, and the Shanghai composite index fell 0.09% to 3,018.77. South Korea’s Kospi also fell 1.41% to 2,277.99 and the Kosdaq dropped 2.78% to 736.10. Japan’s Nikkei 225 reversed earlier declines to end 0.53% higher at 30,858.85, while the Topix ended 1.01% up at 2,253.72. In Australia, the S&P/ASX 200 ended the day up 0.12% at 6,780.7, rebounding off its year low.

Wall Street Ends Higher as Traders Await Fed Speak

Wall Street’s major indexes finished higher overnight as traders looked ahead to the Federal Reserve's upcoming policy decision and digested fresh economic data. The Dow Jones Industrial Average advanced 0.38% to 33,052.87. The S&P 500 climbed 0.65% to 4,193.80, while the Nasdaq Composite added 0.48% to 12,851.24. The Fed kicked off a two-day monetary policy meeting at which the central bank is widely expected to hold interest rates steady. Investors will monitor Fed Chair Jerome Powell's comments for clues about its future plans. Earlier, data showing a solid increase in U.S. labour costs in the third quarter prompted some concerns the Fed could keep interest rates higher for longer.

Investors were also reacting to disappointing earnings reports and showed jitters over geopolitics. Caterpillar shares fell 6% after the machine maker's third quarter report signaled a waning in demand, despite easily beating earnings expectations. Nvidia shares fell after a report said the latest U.S. curbs could force the chip designer to cancel billions of dollars of orders to China. Pinterest surged nearly 20% after the company reported third-quarter results that topped analyst estimates. Real estate and financials outperformed in the S&P 500, with the sectors higher by 2% and 1.1%, respectively.

Source: TA Research - 1 Nov 2023