Range Bound Pending Key US Inflation Data

Blue chips rose on Tuesday, led by telcos, banking and oil & gas heavyweights, as renewed foreign funds purchases lifted the index back up to four-year highs. The FBM KLCI was up 13.33 points to settle at 1,652.29, off an opening low of 1,639.16 and high of 1,653.12, but losers beat gainers 640 to 476 on slightly improved volume totalling 3.18bn shares worth RM3.2bn.

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

Stocks should fall back into range bound trade, pending fresh domestic catalysts and while awaiting key economic and inflation data from the US later this week. Immediate index resistance remains at the recent 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 Dialog & Hibiscus

Dialog needs breakout confirmation above the 25/1/23 high (RM2.66) to fuel upside momentum towards the 123.6%FP (RM2.90) and 138.2%FP (RM3.05) ahead, while the 200- day moving average (RM2.23) limits downside risk. Hibiscus will need to overcome the 50%FR (RM2.37) to enable further recovery towards the 61.8%FR (RM2.49) and 76.4%FR (RM2.65) going forward, with the 23.6%FR (RM2.09), matching the selloff low, cushioning downside.

Asian Markets Sit Tight Ahead of Nvidia Results

Stocks in Asia moved in narrow ranges Tuesday, as markets focus shifted from the Federal Reserve’s policy outlook to Nvidia Corp.’s earnings later this week. Powell on Friday endorsed an imminent start to rate cuts, saying further cooling in the job market would be unwelcome. US inflation figures this week will likely reinforce that long-awaited rate cuts are coming soon, while a reading on consumer spending is seen indicating that the central bank has been successful at keeping the expansion intact. Separately, expectations heading into Nvidia’s earnings on Wednesday are high, with analysts anticipating another strong consensus beat that could prompt the chipmaker to raise its profit guidance. The results may provide further clarity on artificial intelligence demand.

Meanwhile, rising tensions in the Middle East and supply concerns checked risk sentiment and propped up oil prices. On economic news, China’s industrial profits from January to July climbed 3.6% year on year, compared to a 3.5% growth between January and June. Japan’s Nikkei 225 gained 0.47% to close at 38,288.62, while the broad-based Topix added 0.73% to 2,680.80. In Australia, the S&P/ASX 200 fell 0.16%, ending at 8,071.20 and South Korea’s Kospi slipped 0.32% to 2,689.25. In China, Shanghai Composite index ended marginally lower at 2,848.73, while the Hang Seng index gained 0.43% to 17,874.67.

Wall Street Subdued Ahead of Nvidia Results

Wall Street’s major indexes saw choppy trading action overnight, as traders awaited a highly anticipated quarterly earnings report from the chip maker Nvidia Corp and fresh inflation data due later in the week. The Dow Jones Industrial Average crept 0.02% higher to end at 41,250.50. The S&P 500 gained 0.16% to close at 5,625.80, while the Nasdaq Composite added 0.16% to end day at 17,754.82. The choppy trading on Wall Street came as traders seemed reluctant to make significant moves ahead of earnings news from Nvidia, with the AI darling due to release its fiscal second quarter results after the close of trading.

Traders were also looking ahead to the release of the Commerce Department's report on personal income and spending in the month of July, which includes readings on inflation said to be preferred by the Federal Reserve, on Friday. On the U.S. economic front, the Conference Board released a report unexpectedly showing a modest improvement by U.S. consumer confidence in the month of August. On the corporate front, Apple is replacing its long-standing CFO with an insider, Kevan Parekh, with just two weeks to go for its biggest product launch of the year.

Source: TA Research - 28 Aug 2024