Range Bound as Market Look for Economic Leads

Stocks extended profit-taking correction for a second day on Wednesday, with investors sidelined while assessing central bank decisions from key regional economies and awaiting the US Fed Chair’s speech at Jackson Hole. The FBM KLCI lost another 7.45 points to settle at 1,635.32, off an early high of 1,646.38 and low of 1,633.64, as losers edged gainers 573 to 508 on slower trade totalling 3.28bn shares worth RM2.9bn.

Resistance at 1,660/1,680; Immediate Supports at 1,620/1,600

The local market should stay range bound as investors search for leads from the release of more economic data from key regional and developed economies. Immediate index resistance remains at Tuesday’s high of 1,660, followed by 1,680 and then 1,695, the Dec 2020 high, while immediate supports are at 1,620, then 1,600 and 1,580 as stronger supports.

Bargain Aemulus & Hiap Teck

Aemulus should attract bargain hunters on weakness, with key chart supports seen at recent selloff low of 28sen and 1/12/23 low (23sen), while a breach above the 200-day ma (34sen) should aim for 38sen and the 38.2%FR (42sen) ahead. Hiap Teck will be more attractive to buy on dip towards the 38.2%FR (32sen), while a confirmed breakout above the 61.8%FR (39sen) should target the 76.4%FR (43sen) and 47sen going forward.

Asian Markets Slip as Trader Awaits U.S. Payroll Data

Asian markets ended mixed on Wednesday as traders’ risk appetite cooled ahead of Federal Reserve Chair Jerome Powell’s Jackson Hole speech on Friday. The preliminary revisions to U.S. labor data are due to be published on late Wednesday and a large downward revision is expected, which would support cutting interest rates. Powell's keynote address on Friday at the Kansas City Fed's Jackson Hole economic symposium will be parsed carefully for any hints on the likely size of a rate cut next month, and whether borrowing costs are likely to be lowered at each subsequent Fed meeting. Traders will also have a close eye on a special session of Japan's parliament on Friday.

On economic front, Japan’s trade data for July showed exports rose 10.3% year on year and imports grew 16.6%. Economists polled by Reuters had forecast that exports would rise 11.4%, while import growth was pegged at 14.9%. Japan’s Nikkei 225 fell 0.29% to close at 37,951.80, while the broad-based Topix lost 0.21% to 2,664.86. In Australia, the S&P/ASX 200 gained 0.16%, ending at 8,010.50 and South Korea’s Kospi added 0.17% to 2,701.13. The Shanghai Composite fell 0.35% to 2,856.58, while the Hang Seng index dropped 0.69% to 17,391.01.

Wall Street End Higher on Rate-Cut Optimism

Wall Street’s major indexes ticked higher overnight after minutes from the Federal Reserve’s latest policy meeting reinforced expectations that the central bank would likely cut interest rates in September. The Dow Jones Industrial Average ticked up by 0.14% to finish at 40,890.49. The S&P 500 added 0.42% to 5,620.85, while the Nasdaq Composite gained 0.57% to 17,918.99. The higher close on Wall Street came after the minutes of the Fed's late July meeting revealed that "vast majority" of policymakers said it would "likely be appropriate to ease policy at the next meeting" if inflation data kept softening. Further guidance on the Fed’s next steps is expected when Chair Jerome Powell gives a highly anticipated speech at the annual symposium of central bankers in Jackson Hole, Wyoming.

In economic news, the Bureau of Labor Statistics released revised data showing job growth in the U.S. was weaker than previously reported in the twelve months ended March 2024. Target raised its 2024 profit forecast and posted its first quarterly increase in same-store sales in over a year, sending the retailer's stock surging 11.2%. Nine of the 11 major sectors of the S&P 500 closed in positive territory, with consumer discretionary shares enjoying the largest percentage gains.

Source: TA Research - 22 Aug 2024