TA Sector Research

Daily Brief - 23 Apr 2024

Publish date: Tue, 23 Apr 2024, 10:16 AM

External Improvement Needed to Support Further Recovery

Bursa Malaysia shares rose on Monday, shored up by the firm external tone as investors shrugged off the tensions between Israel and Iran and awaited key economic data this week which will help finesse bets on the timing of rate cuts. The FBM KLCI gained 12.02 points to settle at 1,559.59, off the opening low of 1,548.38 and high of 1,559.94, as gainers thrashed losers 764 to 331 on total turnover of 3.49bn shares worth RM2.52bn.

Resistance at 1,565/1,580; Supports at 1,535/1,514

Further improvement in the external market tone, corporate earnings and economic data would be essential to sustain further recovery from the recent sell-off. Immediate overhead resistance for the index will be from the recent high of 1,565, with stronger upside hurdles seen at 1,580 and then 1,600. Immediate supports remain at 1,535 and 1,514, the respective rising 50-day and 100-day moving averages, with better support at 1,500.

Bargain Gamuda & Suncon

Gamuda should attract buyers on weakness for recovery upside towards the 138.2%FP (RM5.40), with the 150%FP (RM5.60) and 161.8%FP (5.78) as next upside hurdles, while key chart supports are from 200-day ma (RM4.71) and 08/11/23 low (RM4.60). Likewise, Suncon is attractive to bargain for recovery upside to the 150%FP (RM3.08), with next hurdle at the 161.8%FP (RM3.20) and immediate supports at the lower Bollinger band (RM2.71) and the 14/03/24 low (RM2.59).

Asian Markets Firmer as Traders Shrugs Off Geopolitical Tension

Asian market rose on Monday, as traders see limited risk that Israel’s retaliatory strike on Iran will trigger a wider war, while market focus shifted to a slew of company earnings and economic data this week. Traders took comfort in the absence of further escalation from Iran following Israel’s retaliatory strike. Iran said it had no plan to retaliate following an apparent Israeli drone attack within its borders, which in turn followed an unprecedented Iranian missile and drone attack on Israel days before. This week will also deliver several major economic updates, with GDP due out on Thursday and a key inflation reading on Friday.

Corporate earnings could also be a factor in the coming days, with names like Tesla, Meta Platforms, Microsoft and Alphabet all set to report in the week ahead. Japan’s Nikkei 225 gained 1% to end at 38,438.61, while the broad-based Topix added 1.34% to close at 2,662.46. South Korea’s Kospi also jumped 1.45% to 2,629.44, while Australia’s S&P/ASX 200 gained 1.08% to 7,649.20. Hong Kong’s Hang Seng index popped 1.77% to 16,511.69, but the Shanghai composite index fell 0.67% to 3,044.60.

Wall Street Snaps Losing Streak Ahead of Corporate Earnings

Wall Street’s main indexes staged a rebound overnight, as traders looked ahead to the release of major earnings from key companies that would provide a glimpse of the U.S. economy's health. The Dow Jones Industrial Average rose 0.67% to close at 38,239.98. The S&P 500 traded 0.87% higher to finish the session at 5,010.60, while the Nasdaq Composite advanced 1.11% to 15,451.31. Hopes are now resting on Big Tech earnings this week to reassure and reignite the market. On deck are quarterly reports from Meta, Microsoft and Alphabet. In addition to top corporate earnings, markets are also awaiting a slew of key U.S. economic data this week, including reports on new home sales, durable goods orders and personal income and spending.

The Commerce Department's personal income and spending report includes readings on inflation said to be preferred by the Federal Reserve. The information technology sector is expected to increase earnings by 20% in the first quarter, according to analyst forecasts compiled by FactSet. They project 20% in communications services, which includes Meta and Alphabet. Chipmaker and artificial intelligence favorite Nvidia climbed 4.4%, bouncing from a nearly 14% sell-off last week, its worst since September 2022.

Source: TA Research - 23 Apr 2024

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