Data Centre & Infrastructure Plays to Dominate

Blue chips closed mixed on Thursday, with profit-taking capping the index’s rise to a threeyear high, while the construction, property, transport and logistics sectors continue to attract buying interest. The FBM KLCI ended flat at 1,633.81 (+0.27) after oscillating between early high of 1,634.24 and low of 1,627.93, as losers beat gainers 727 to 499 on steady turnover of 5.48bn shares worth RM4.22bn.

Resistance at 1,638/1,640; Supports at 1,622/1,611

The local market should pause for profit-taking breather ahead of the weekend, with trading focus on the construction, property and logistics sectors given the continuing keen interest in data centre and infrastructure plays. Immediate index resistance remains at the recent high of 1,638, with 1,640 and 1,660 as tougher upside hurdles, while immediate supports are at 1,622, 1,611 and 1,602, the respectively rising 10-day, 30-day and 50-day moving average levels.

Bargain Gadang & IWCity

A confirmed breakout on Gadang shares above the 150%FP (52sen) will extend uptrend to target the 161.8%FP (54sen), 176.4%FP (56sen) and 200%FP (60sen) ahead, while the rising 50-day ma (45sen) and 100-day ma (43sen) cushion downside. IWCity will need convincing breakout above the 76.4%FR (90sen) to boost upside momentum and aim for the 8/1/24 peak (RM1.03) and 123.6%FP (RM1.16) going forward, while key support from the 200-day ma (74sen) limits downside risk.

Asian Markets Tumble as Tech Stocks Drag

Most Asian markets ended lower on Thursday as technology stocks tumbled amid prospects of tighter trade curbs on Chinese companies by the US administration. Chipmaker and tech stocks in Asia face a double whammy as concern about tighter US restrictions on chip sales to China spurred a selloff in the industry that has led the bull market in stocks. The Biden administration told allies it’s considering severe curbs if companies like Tokyo Electron and ASML keep giving China access to advanced semiconductor technology. Meanwhile, Donald Trump, speaking in an interview with Bloomberg Businessweek, questioned whether the US has a duty to defend Taiwan, a major hub of semiconductor manufacturing.

On economic front, Japan’s exports rose 5.4% year on year in June, a steep decline from 13.5% in May. Imports grew 3.2% year on year last month, down from 9.5% in May. Traders in China also await policy news from a key leadership gathering in Beijing that is expected to end on Thursday. Japan’s Nikkei 225 dropped 2.36% to 40,125.35, while the Topix fell 1.60% to 2,868.63. South Korea’s Kospi also slipped 0.67% to 2,824.35 and Australia’s S&P/ASX 200 fell 0.27% to 8,036.50. The Shanghai Composite Index gained 0.48% to 2,977.13, while Hong Kong’s Hang Seng added 0.22% to 17,778.41.

Wall Street Slip on Trade, Political Woes

Wall Street’s main indexes tumbled overnight, as trade and political risks unsettled a market that was finally confident that the Fed would cut interest rates this year. The Dow Jones Industrial Average slid 1.29% to close at 40,665.02. The S&P 500 dropped 0.78% to end at 5,544.59 and the technology-heavy Nasdaq Composite lost 0.70% to close at 17,871.22. The weakness on Wall Street partly reflects concerns about the near-term outlook for the markets following the tech sell-off on Wednesday after President Joe Biden's administration told allies that it's considering tougher trade rules against companies in its chip crackdown on China. Elsewhere, traders are keeping a watchful eye on the US presidential race, given Republican nominee Donald Trump's potential to move markets.

In economic news, initial jobless claims data landed above analysts' estimates, providing further evidence that the labor market is softening. This is a necessary step toward putting inflation on a sustainable downward path, according to the U.S. Federal Reserve. Separately, the Federal Reserve Bank of Philadelphia released a separate report showing the pace of growth reaccelerated by much more than expected in the month of July. On earnings front, secondquarter earnings season gained momentum, with 60 of the companies in the S&P 500 having reported. Of those, 85% have delivered consensus-beating results, LSEG data showed.

Source: TA Research - 19 Jul 2024