Profit-Taking Pause After Rise to 3-Year High

Profit-taking dragged blue chips down from a three-year high on Monday, led by construction, property, telco and oil & gas heavyweights, which forced the blue-chip index to suffer a double-digit fall. The FBM KLCI lost 14.48 points to close at 1,622.07, off an opening high of 1,637.12 and low of 1,616.74, as losers swarmed gainers 1,044 to 285 on total turnover of 5.34bn shares worth RM3.42bn.

Resistance at 1,638/1,640; Supports at 1,613/1,604

Stocks should pause for profit-taking consolidation as traders digest gains after rising to fresh three-year highs, with trading attention likely to sustain on the construction, property and logistics sectors on prevailing 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 revised lower to 1,613, 1,604 and 1,580, the respectively rising 30-day, 50-day and 100-day moving average levels.

Bargain AMBank & Maybank

AMBank needs a confirmed breakout above the 123.6%FP (RM4.52) to enhance upside momentum towards the 138.2%FP (RM4.68) and 150%FP (RM4.80) ahead, while uptrend supports from the 50-day ma (RM4.20) and 100-day ma (RM4.11) cushion downside. Likewise, Maybank will need breakout confirmation above the 123.6%FP (RM10.28) to extend uptrend and aim for the 138.2%FP (RM10.58) and 150%FP (RM10.82) going forward, with the 50-day ma (RM9.97) and 100-day ma (RM9.78) cushioning downside.

Asian Markets Slip Ahead of Economic Data, Earnings

Asian markets fell on Monday as traders await economic data from the region and U.S and corporate earnings that should test the sky-high valuations of tech stocks this week. This week, traders will be looking out for GDP data from South Korea and the U.S., as well as factory activity data from around the region. South Korea and the U.S will announce secondquarter advance GDP numbers on Thursday. Other economic data this week include inflation numbers from the U.S. and Singapore on Friday and Tuesday, respectively. U.S. secondquarter earnings are also poised to dominate the week, with Tesla and Google-parent Alphabet kicking off the season for the "Magnificent Seven" mega cap group of stocks.

On economic news, the People's Bank of China cut short and long-term rates by 10 basis points, saying it was aiming to support growth and pulled bond yields down across the curve. The move follows Beijing's release of a policy document on Sunday outlining its ambitions for the economy. Japan’s Nikkei 225 dropped 1.16% to 39,599.00, while the Topix fell 1.16% to 2,827.53. South Korea’s Kospi also slipped 1.14% to 2,763.51 and Australia’s S&P/ASX 200 fell 0.50% to 7,931.70. The Shanghai Composite Index slipped 0.61% to 2,964.22 while Hong Kong’s Hang Seng bucked the regional trend by gaining 1.25% to 17,635.88.

Wall Street Gain as Biden Exits Presidential Race

Wall Street’s main indexes ended higher overnight as traders assessed the political landscape following President Joe Biden's exit from the presidential race and braced for the start of the tech earnings season. The Dow Jones Industrial Average rose 0.32% to finish at 40,415.44. The S&P 500 climbed 1.08% to settle at 5,564.41 and the Nasdaq Composite jumped 1.58% to close at 18,007.57. The moves overnight came after a huge shakeup in the race for president in the US. Democratic leaders continued to rally around Vice President Kamala Harris in the wake of Biden's exit, with former House Speaker Nancy Pelosi the latest big name to endorse Harris as the party's presidential nominee.

Tech stocks led the gains following the steep drop seen last week, which saw the Nasdaq plunge by 3.7%. Nvidia popped 4.8%, recovering some of its 8% pullback from last week. Other major tech stocks such as Meta Platforms and Alphabet also rose more than 2%. Earnings and central bank policy remain top of mind for Wall Street. Traders have been pricing in nearly a 93% likelihood of the Federal Reserve cutting interest rates during its September meeting.

Source: TA Research - 23 Jul 2024