Choppy on US Growth Uncertainty

Blue chips bounced back on Tuesday, led by the construction (+4.8%), property (+4.6%) and technology (+3.9%) sectors, mirroring the rebound on regional markets led by Japan’s 10.2% rally from the previous day’s selloff. The FBM KLCI jumped 37.91 points, or 2.5%, to end at the day’s high of 1,574.39, off an early low of 1,529.09, as gainers swarmed losers 1,083 to 309 on robust trade totaling 6.39bn shares worth RM5.32bn.

Key Supports at 1,529/1,1520; Resistance at 1,585/1,600

Stocks should remain choppy near-term given uncertainty over the growth momentum of the US economy, as investors begin to price in larger interest rate cuts to help cushion potential recession. Key index supports will be at yesterday’s low of 1,529, then 1,520 and 1,500, while immediate resistance on rebound attempts will be at the 100-day ma (1,585), 1,600 and then 1,620.

Bargain Globetronics & Unisem

Globetronics should be set for oversold rebound ahead, with downside cushioned by key chart supports at RM1.06 and Oct 2022 low (95sen), and overhead resistance at the 38.2%FR (RM1.28), with tougher resistance at 50%FR (RM1.38) and 61.8%FR (RM1.48). Likewise, Unisem should be due for oversold rebound, with key supports seen at the 50%FR (RM3.04) and 38.2%FR (RM2.84), and major upside hurdles viewed at the 200-day ma (RM3.55), RM3.90 and 123.6%FP (RM4.30).

Asian Markets Recover With Japan Up More Than 10%

Asian markets ended mostly higher on Tuesday, with the Nikkei 225 closing the day up 10.23%, its largest daily gain since October 2008 and highest ever spike in terms of index points. The Topix finished up 9.3% at 2,434.21. The rallies in Japan saw both indexes climb back into positive territories for the year so far. South Korea’s Kospi jumped 3.3% to end the day at 2,522.15, while the small-cap Kosdaq rose 6.02% to 732.87. The South Korean markets had been halted temporarily on Monday after they fell 8%, triggering circuit breakers. Mainland

China’s CSI 300 closed about even to end at 3,342.98, while Hong Kong’s Hang Seng index was little changed at its close. Australia’s S&P/ASX 200 ended up 0.41% to reach 7,680.6.

The Reserve Bank of Australia decided to keep its cash rate steady at 4.35% on Tuesday, as expected by economists. The bank noted that inflation had remained above the midpoint of its target for 11 consecutive quarters and that the economic outlook for Australia remained uncertain. The RBA also slightly upgraded its GDP growth forecast for the year ending December to 1.7% from 1.6% estimated in May. Meanwhile, CPI is now expected to come in lower at 3.0% for the year ending December compared to a prior expectation of 3.8%.

Wall Street Ends Higher on Bargain Hunting

Wall Street's main indexes finished higher overnight as traders looked for bargains after a global stock selloff and dovish comments from Federal Reserve officials lifted market sentiment. The Dow Jones Industrial Average rose 0.76% to end at 38,997.66. The S&P 500 advanced 1.04%, closing at 5,240.03, while the tech-heavy Nasdaq Composite gained 1.03% to settle at 16,366.85. Bargain hunting has contributed to the strength on Wall Street, as traders bought beaten-down stocks caught up in a catastrophic start to the week for markets. Meanwhile, U.S. central bank policymakers also pushed back against the idea that weakerthan-expected July jobs data means the economy is headed for a recession, but they also warned that the Fed will need to cut interest rates to avoid such an outcome.

The next big Fed event is Chair Jerome Powell's speech at the Jackson Hole on Aug. 22-24. A positive reaction to some of the latest corporate earnings news has also generated buying interest, as Uber shares rose sharply after the ride-sharing and food delivery provider beat Wall Street estimates for second-quarter revenue and core profit, helped by steady demand for its services. Caterpillar also gained after beating analysts' estimates for second-quarter profit, as higher prices on its larger excavators and other equipment countered moderating demand in North America.

Source: TA Research - 7 Aug 2024