Upbeat as Markets Assess Tech Earnings and Economic Data

Rotational buying into construction and rubber glove related stocks on Tuesday sustained trading interest and added to gains as external markets stabilized. The FBM KLCI added 2.05 points to close at 1,561.64, off an opening low of 1,559.81 and high of 1,567.57, as gainers led losers 642 to 402 on improved turnover totalling 3.73bn shares worth RM2.79bn.

Resistance at 1,580/1,600; Supports at 1,544/1,536

The local market tone should remain upbeat as external markets stabilize, as investors assess earnings from key US tech giants and economic data for further clues on the sustainability of global economic recovery. Immediate resistance for the index will be revised to 1,580, with stronger upside hurdles seen at 1,600 and then 1,620. Key supports will be at 1,544, 1,536 and 1,515, the respective rising 30-day, 50-day and 100-day moving averages.

Bargain Supermax & Top Glove

Supermax need to overcome resistance from the 200-day ma (86sen) and 100-day ma (89sen) convincingly to aim for next upside hurdles at 95sen and RM1.04 ahead, while stronger chart supports are at 75sen and 70sen. Top Glove will need breakout confirmation above the 100- day ma (86sen) to enhance upside momentum towards 94sen, RM1.02 and RM1.10 going forward, while the lower Bollinger band (78sen), 75sen and 70sen provide stronger chart supports.

Asian Markets Mixed Ahead of Tech Earnings

Stocks in Asia ended mixed Tuesday as focus shifts to earnings results from U.S. tech giants and economic data this week for insight into the direction of central bank policy. Traders are waiting to see if earnings will meet the lofty expectations for artificial intelligence this week when about 180 companies in the S&P 500 representing over 40% of the gauge’s market capitalization are due to report their results. Stakes are high for the “Magnificent Seven” megacaps, whose profits are forecast to rise nearly 40% from a year ago, according to Bloomberg Intelligence. Separately, markets are also awaiting the release later this week of the U.S. gross domestic product figures and the March personal consumption expenditure data - the Fed's preferred inflation gauge - to further ascertain the trajectory of monetary policy.

On economic news, figures from S&P Global show that Australia’s composite purchasing managers index hit a two-year high, coming in at 53.6 against March’s 53.3. Japan and India also recorded faster rates of expansion in their business activity in April. Hong Kong’s Hang Seng index jumped 1.92% to 16,828.93, while Australia’s P/ASX 200 gained 0.45% to 7,683.50. Japan’s Nikkei 225 also rose 0.30% to end at 37,552.16, while the broad-based Topix added 0.14% to close at 2,666.23. In South Korea, the Kospi fell 0.24% to 2,623.02, and the Shanghai composite index lost 0.74% to 3,021.98.

Wall Street Rises on Positive Corporate Earnings

Wall Street’s main indexes ended higher overnight after a slew of household names reported positive earnings ahead of quarterly results from Magnificent Seven and other mega-cap growth stocks. The Dow Jones Industrial Average gained 0.69% to close at 38,503.69. The S&P climbed 1.20% to close at 5,070.55, while the Nasdaq Composite jumped 1.59% to 15,696.64. Markets were buoyed by upbeat earnings from companies such as General Motors, which closed up after the automaker's better-than-expected quarterly results. General Motors gained more than 4%. Spotify also surged 11.4% after surpassing Wall Street’s firstquarter estimates and issuing rosy second-quarter guidance. The earnings onslaught will continue this week, with Alphabet, Meta and Microsoft among the companies due to report results.

Roughly 20% of the S&P 500 has reported earnings. Of those companies, 76% have beaten analysts’ expectations, FactSet data shows. On economic news, data overnight showed that U.S. business activity cooled in April to a four-month low due to weaker demand, while rates of inflation eased slightly even as input prices rose sharply, suggesting possible relief ahead for rising consumer prices. Traders will be eyeing the release of the March Personal Consumption Expenditures index, the Federal Reserve's preferred inflation gauge on Friday.

Source: TA Research - 24 Apr 2024