Foreign Fund Inflows & Strong Ringgit to Underpin Sentiment

The local market stayed in profit-taking consolidation mode on Thursday, led by oil & gas and technology heavyweights, ignoring the strong performance on North Asian markets sparked by China’s stimulus measures. The FBM KLCI slipped 2.06 points to close at 1,671.32, off an early high of 1,672.60 and low of 1,666.19, as losers beat gainers 582 to 525 on moderate turnover of 3.13bn shares worth RM2.83bn.

Key Resistance at 1,684/1,695; Supports at 1,650/1,633

While stocks remain in consolidation, expectations for further foreign fund inflows amidst the strong ringgit and hopes for further interest rate cuts by key global central banks should underpin sentiment. Immediate index resistance is retained at the high of 1,684, then 1,695, the Dec 2020 high, as tougher resistance. Immediate support will be at 1,650, then the recent correction low of 1,633, with 1,620 and 1,600 acting as stronger supports.

Sell Rally Duopharma & Bargain Pharmaniaga

Further rally on Duopharma would aggravate overbought momentum and increase profittaking resistance, specifically towards the 23.6%FR (RM1.47) and RM1.55, while pullbacks should find supports at the 50%FR (RM1.31) and 61.8%FR (RM1.24). Pharmaniaga is still in base building mode, with chart supports at the lower Bollinger band (36sen) and 23.6%FR (33sen) cushioning downside, while a confirmed breakout above the 38.2%FR (40sen) should aim for the 50%FR (46sen) and 61.8%FR (51sen) ahead.

Asian Markets Extend Gains on China Optimism

Asian markets bucked the global trend to extend a rally on Thursday, as the markets continue to react to the slew of stimulus measures announced by the Chinese central bank to boost the nation's economy. Asian equities have soared this week after the People’s Bank of China came out with a slew of measures to revive the world’s second-largest economy. Bloomberg News reported that China is considering injecting up to 1 trillion yuan of capital into its biggest state banks to increase their capacity to support the struggling economy. Increased bets for another super-sized interest rate cut at the US Fed's November meeting is also aiding market sentiment.

In the broader market, traders turned their attention to a raft of speeches from Federal Reserve policymakers later in the day, including remarks from Chair Jerome Powell, which could provide further clues on the U.S. rate outlook. In the mainland, the Shanghai Composite jumped 3.58% to 3,000.65, while Hong Kong’s Hang Seng index surged 4.16% to 19,924.58. Japan’s Nikkei 225 jumped 2.79% to 38,925.63, while the Topix added 2.66% to 2,721.12. South Korea’s blue-chip Kospi also rose 2.66% to 2,721.12 and Australia’s S&P/ASX gained 0.95% to 8,203.70.

Wall Street Rose On Upbeat Economic Data

Wall Street’s main indexes closed modestly higher overnight as a strong U.S. jobless claims report eased concerns about the labor market. The Dow Jones Industrial Average advanced 0.62% to end at 42,175.11. The S&P 500 climbed 0.40% to 5,745.37, while the Nasdaq Composite added 0.60% to 18,190.29. A string of robust U.S. economic data eased concerns that the Federal Reserve may be cutting rates aggressively to curb any slowdown. Weekly jobless claims fell more than anticipated, signaling a steady labour market, while the final reading of gross domestic product confirmed that the economy grew 3% in the second quarter. Up next, will bring a highly anticipated reading on the Personal Consumption Expenditures index, the inflation metric preferred by the Fed.

Micron Technology led the way with a jump of 14.7% after the maker of computer memory and storage delivered stronger profit for the latest quarter than analysts expected. It benefited from sales related to artificial-intelligence technology, where a boom has helped drive some stocks to astounding heights. Some other chip players including Advanced Micro Devices and ASML also rose. However, drops for Exxon Mobil and other oil-and-gas companies kept the market’s gains in check. Oil prices sank after The Financial Times reported through sources that Saudi Arabia is preparing to abandon its unofficial price target of USD100 a barrel for crude.

Source: TA Research - 27 Sept 2024