Rubber Gloves Rally on High US Tariff Hike Hopes

Rubber glove stocks spiked up on Tuesday, sparked by expectations the US will soon finalize high import tariff hikes on China’s medical gloves, hence sharply closing the price gap with local exporters. The FBM KLCI climbed 12.13 points to close at 1,664.28, off an early low of 1,651.55 and high of 1,664.99, as gainers led losers 658 to 433 on total turnover of 3.18bn shares worth RM3.35bn.

Key Resistance at 1,670/1,684; Supports at 1,633/1,620

While local rubber glove stocks continue to attract bargain hunters on hopes for renewed export demand due to the potential US tariff hikes on China’s exports, the broader market should stay range bound as investors await the highly anticipated US interest rate cut. Immediate index resistance remains at 1,670, with the recent high of 1,684, then 1,695, the Dec 2020 high, as tougher resistance levels. Immediate support will be at the recent correction low of 1,633, with 1,620 and 1,600 acting as stronger supports.

Bargain Bumi Armada & Dialog

Bumi Armada need to overcome the 50%FR (52sen) to enhance recovery potential towards the 61.8%FR (57sen) and 76.4%FR (63sen) ahead, while the recent correction low (44sen) and 23.6%FR (41sen) should cap downside risk. Dialog will need persistent strength above the 61.8%FR (RM2.28) to boost upside momentum towards the 76.4%FR (RM2.43), with tougher resistance seen at the upper Bollinger band (RM2.55), while the lower band (RM2.11) and 38.2%FR (RM2.04) should cushion downside.

Asia Mixed Ahead of US Fed Meeting

Asian markets were mixed on Tuesday with Japan’s Nikkei 225 falling as much as 2% before paring some losses, as investors waited for the US Federal Reserve to kick off its monetary loosening cycle. Japan’s Nikkei 225 closed 1.03% lower at 36,203.22. The stocks fell as the yen strengthened for a sixth straight session to its strongest since July 2023. The Fed is expected to announce its first interest rate cut since March 2022, but markets are split over the size of the reduction from the two-day policy meeting, which begins Tuesday. U.S. retail sales data is also set to take centre stage as investors monitor the health of the consumer in the lead up to the Fed’s meeting.

Traders in Asia will also parse Singapore’s non-oil domestic exports for August, which rose 10.7% from a year ago, official data showed Tuesday, while falling 4.7% from the previous month. The figures compare with a Reuters forecast of a 15% year-on-year expansion and a 3.3% month-on-month drop. Shares of Chinese appliance maker Midea Group surged over 9% in their Hong Kong debut from their offer price of HKD54.80 apiece. This is the city’s largest listing in more than three years. Hong Kong’s Hang Seng index was up 1.37% to end at 17,660.02, while Australia’s S&P/ASX 200 gained 0.24% to close at 8,140.9. South Korea, mainland China and Taiwan’s markets were closed for a holiday.

Wall Street Subdued Ahead of Fed Rate Decision

Wall Street’s major indexes closed nearly unchanged overnight as traders geared up for the Federal Reserve’s first interest-rate cut since early 2020. The Dow Jones Industrial Average inched down 0.04% to close at 41,606.18. The S&P 500 closed higher by 0.03% at 5,634.58, while the Nasdaq Composite crept higher by 0.20% and ended at 17,628.06. Optimism about the outlook for interest rates contributed to early strength on Wall Street, but buying interest waned over the course of the session. Stocks ended the day little changed following the release of a Commerce Department report unexpectedly showing a modest increase by U.S. retail sales in the month of August.

While the data is positive for the economy, it was seen as reducing the likelihood the Federal Reserve will lower interest rates by 50 basis points when announcing its highly anticipated monetary policy decision late Wednesday. Microsoft was the biggest lift to the S&P 500, as shares rose after the AI frontrunner's board approved a new USD60 billion share-buyback program and hiked its quarterly dividend by 10%. Among other movers, Intel gained after signing Amazon's cloud-services unit as a customer to make custom artificial-intelligence chips.

Source: TA Research - 18 Sept 2024