Profit-Taking Pause on Weak Market Breadth

Strong gains in banks and plantation heavyweights fuelled by foreign funds buying lifted the blue-chip benchmark closer to a four-year peak on Wednesday. The FBM KLCI surged 22.95 points, or 1.4% to close at 1,675.24, off an opening low of 1,657.77 and high of 1,681.37, but losers beat gainers 783 to 407 on better turnover of 3.95bn shares worth RM4.65bn.

Key Resistance at 1,695/1,702; Supports at 1,633/1,620

Blue chips should pause for profit-taking breather following recent strong gains, given the weak broader market breadth and buying momentum as investors await further local catalysts and key US inflation data. Key index resistance will be at 1,695, the Dec 2020 high, followed by the 123.6%FP (1,702) and 138.2%FP (1,741), while immediate supports are revised to the recent correction low of 1,633, then 1,620 and 1,600 as stronger supports.

Bargain Genting Berhad & GENM

Genting Berhad needs to overcome the 50%FR (RM4.52) to promote further recovery towards the 61.8%FR (RM4.66) and 76.4%FR (RM4.83) ahead, while the 23.6%FR (RM4.21) which mirrors the selloff low, cushions downside. GENM will need convincing breakout above the 100-day ma (RM2.60) to fuel further upside momentum towards the 61.8%FR (RM2.65) and 76.4%FR (RM2.72) going forward, with downside seen restricted by the lower Bollinger band (RM2.42).

Asian Markets Subdued as Traders Hold Breath for Nvidia

Stocks in Asia were stuck in range bound trade Wednesday, as traders prepared for a slew of earnings that will set the tone for risk assets and digest economic data from the region. Traders are keeping an eye on Nvidia, the leader of the artificial intelligence trade, to gauge the broader sustainability of the broader tech and AI trade. Nvidia’s results and forecast will serve as a barometer for AI spending across much of the technology industry. Traders also remain cautious and await the release of key US inflation report later in the week, which could impact expectations for how quickly the US Fed will cut interest rates.

On economic news, minutes of the Reserve Bank of Australia’s last meeting revealed that the central bank had considered raising interest rates as it strives to tame inflation. Japan’s Nikkei 225 reversed losses to gain 0.22%, ending at 38,371.76, while the broad-based Topix rose 0.42% to close at 2,692.12. Australia’s S&P/ASX 200 closed nearly unchanged at 8,071.40 and South Korea’s Kospi ended flat at 2,689.83. In China, Shanghai Composite index fell 0.40% to 2,837.43, while the Hang Seng index slipped 1.02% to 17,692.45.

Tech Stock Slide Drags Wall Street Lower

Wall Street’s major indexes fell overnight, with weakness in the tech sector weighing on the broader markets ahead of Nvidia Corp.’s latest earnings report after the bell as well as economic data later this week. The Dow Jones Industrial Average lost 0.39% settling at 41,091.42. The S&P 500 slipped 0.60% to end at 5,592.18, while the Nasdaq Composite fell 1.12% to close at 17,556.03. The weakness on Wall Street partly reflected anxiety ahead of the release of market leader Nvidia's fiscal second quarter results after the close of trading.

Any disappointment in Nvidia's results could hurt mega caps and other semiconductor stocks, which have led 2024's rally on the prospect of AI integration boosting corporate profits.

Stocks were also under pressure as traders looked ahead to Friday's release of the Commerce Department report on personal income and spending in the month of July, which includes readings on inflation said to be preferred by the Federal Reserve. While the data is not likely to affect optimism that the Fed will lower rates next month, it could impact expectations for how quickly the central bank cuts rates. Nvidia fell 2.1%, contributing to the information technology sector’s 1.3% decline.

Source: TA Research - 29 Aug 2024