TA Sector Research

Daily Brief - 1 Dec 2023

Publish date: Fri, 01 Dec 2023, 09:39 AM

Range Bound as Earnings Season Ends

Late buying in key consumer, construction, plantation and utility heavyweights lifted the local blue-chip benchmark index off lows to close in positive territory on Thursday. The FBM KLCI ended up 6.67 points at the day’s high of 1,452.74, off an early low of 1,440.62, as losers beat gainers 626 to 328 on higher turnover of 4.25bn shares worth RM4.97bn.

Better Supports at 1,430/1,400; Resistance at 1,465/1,470

The local market should continue to stay range bound ahead of the weekend, and pending significant market leads as the current earnings reporting season draws to an end. On the index, better support is at 1,430, with 1,400/1,390 as stronger chart supports, while the end

June low of 1,370 will act as crucial support. Immediate resistance is at 1,465/1,470, with the 1,490/1,500 area acting as tougher upside hurdle.

Bargain SKP Resources & VSI

Further weakness on SKP Resources towards stronger chart supports at 70sen and the 123.6%FP (60sen) will look attractive to bargain for rebound upside towards the upper Bollinger band (86sen), with tougher upside hurdles from the 100-day ma (90sen) and 76.4%FR (RM1.02). VSI need to climb above the 61.8%FR (93sen) to reinforce upside momentum towards the 50%FR (99sen) and 38.2%FR (RM1.05) ahead, while the 76.4%FR (86sen) and 80sen provide better supports.

Asian Markets Rose on Steady Rate Outlook

Asian markets rose on Thursday to clock their strongest performance in 10 months, as investor sentiment warmed on a relatively benign global interest rates outlook and signs of economic recovery. South Korea stock markets were up after the country’s central bank held lending rates for the seventh straight time, while Hong Kong's Hang Seng Index pared losses to be up 0.3%, while China's benchmark CSI300 Index rose as much as 0.24%, despite disappointing Chinese manufacturing data. The closely watched factory survey showed manufacturing activity contracted for a second straight month in November and at a quicker pace, suggesting more government support is needed to help shore up growth in the world's second-largest economy.

South Korea’s central bank held its benchmark policy rate at 3.5%, saying that although inflation in the country has been elevated, it is still projected to slow down. China’s factory activity shrank for a second straight month in November, while non-manufacturing activity hit yet another new low for the year. South Korea’s industrial output numbers surprised the market, registering a 3.5% fall compared to expectations of a 0.5% rise from economists polled by Reuters. Japan’s Nikkei 225 reversed losses to rise 0.33%, while South Korea’s Kospi rose 0.12% after the monetary policy decision. In Australia, the S&P/ASX 200 climbed 0.74% and closed at 7,087.3, marking three straight days of gains.

Dow Rallies on Cool Inflation Data

The Dow Jones Industrial Average rallied overnight as traders continued to bet on interest rate cuts after new data shows inflation continues to cool. The Dow Jones Industrial Average jumped 1.47% to 35,950.89. The S&P gained 0.38% to 4,567.80, but the Nasdaq Composite fell 0.23% to 14,226.22. Inflation continued to cool in October, according to the Federal Reserve's favorite price index. The Personal Consumption Expenditures Index grew 3% year over year for the month, down from 3.4% in September and in line with expectations. The print could add more fuel to the notion that the Fed is done with hiking this cycle and may cut rates sooner than thought. However, the Nasdaq underperformed as traders were taking some of those bets off the table as the month came to a close.

Meanwhile, oil prices swung as traders grew more convinced that OPEC+, a group composed of OPEC plus its oil-producing allies, will not deliver on promised output cuts. Leading the Dow higher is cloud software company Salesforce, which popped 8.6% on the back of betterthan-expected earnings and revenue for the fiscal third quarter. Healthcare companies UnitedHealth Group, Johnson & Johnson, Merck and Amgen also led the index higher. Tesla took a tumble even as CEO Elon Musk hyped Cybertruck deliveries. Fellow Magnificent Seven stocks Nvidia, Meta Platforms and Microsoft also fell.

Source: TA Research - 1 Dec 2023

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