Cautious Amid Escalating Middle East Tension

Stocks rebounded to close off lows Thursday, as energy stocks rose due to surge in oil prices amid growing fears widening geopolitical tensions in the Middle East will lead to supply disruptions from the region. The FBM KLCI gained 2.24 points to close at 1641.55, off an early high of 1643.82 and low of 1630.45, but losers edged out gainers 504 to 473 on moderate turnover of 3.29bn shares worth RM2.52bn.

Key Supports at 1,630/1,620; Resistance at 1,660/1,675

Market sentiment will remain cautious given worries over escalating tensions in the Middle East, and ahead of the closely watched US September unemployment data due Friday night. Immediate index support will be the recent correction low of 1,630, with 1,620 and then 1,600 acting as stronger supports. Immediate resistance is set at 1,660, followed by the recent highs of 1,675 and 1,684, and then 1,695, the Dec 2020 high, as tougher resistance levels.

Bargain Public Bank & RHB Bank

Public Bank will need to climb above the 30-day ma (RM4.64) to enhance upside momentum towards the 161.8%FP (RM4.80) and 176.4%FP (RM4.92), while uptrend support from the rising 50-day ma (RM4.46) cushions downside. RHB Bank need breakout momentum to overcome the 123.6%FP (RM6.39) and aim for the 138.2%FP (RM6.55) and 150%FP (RM6.68) going forward, with the rising 50-day ma (RM5.87) acting as key uptrend support.

Asian Markets Mixed as Traders Digest BOJ Remarks, Economic Data

Asian markets were mixed on Thursday, as traders digest Japan prime minister’s remarks and economic data from the region. Japan’s new prime minister, Shigeru Ishiba, told reporters economic conditions don’t currently support another rate hike. Ishiba made his comments after meeting with Bank of Japan Governor Kazuo Ueda. Ueda also said the central bank would move cautiously in deciding whether to raise rates. Elsewhere in Asia, a historic rally in Chinese stocks in Hong Kong took a breather, as traders hit pause on their world-beating rally over the past month. On economic news, Australia’s seasonally adjusted Judo Bank Composite PMI data came in at 49.6 in September, lower from the 51.7 in August, falling past the 50 neutral marks.

Separately, Japan’s au Jibun bank composite final PMI for September stood at 52.0, signaling a softer expansion in the private sector compared to 52.9 in August, according to the private survey conducted by S&P Global Intelligence. Japan’s Nikkei 225 jumped 1.97% to 38,552.06 and the Topix added 1.20% to 2,683.71. Australia’s S&P/ASX 200 rose 0.09% to 8,205.20, but the Hong Kong’s Hang Seng fell 1.47% to 22,113.51. South Korea was shut for National Foundation Day, while mainland China will be closed for the rest of the week due to the Golden Week holiday.

Wall Street Fall Amid Middle East Tensions

Wall Street’s main indexes ended lower overnight, as traders weighed the risk of escalating conflict in the Middle East against signs that the U.S. economy is ticking along. The Dow Jones Industrial Average slid 0.44% to end at 42,011.59. The S&P 500 lost 0.17% to close at 5,699.94, while the Nasdaq Composite fell 0.04% to 17,918.48. Traders kept an eye on the latest developments in the Middle East, where an escalating conflict has contributed to a sharp increase by the price of crude oil. The Israel Defense Forces announced that more infantry and armored troops had joined the operation seeking to dismantle what it called “terrorist infrastructure” in Lebanese border villages and eight soldiers had been killed in combat in southern Lebanon.

U.S. crude futures rose more than 5%. That propelled its week-to-date advance to more than 8% as growing fears tied to the Middle East pushed up prices. On economic news, data overnight showed that the number of Americans filing new applications for unemployment benefits rose marginally last week. That offers hints into the health of the labor market as traders gear up for September’s closely watched payrolls report due on late Friday. Traders are eager for more data on the labor market after the Federal Reserve last month cut its benchmark interest rate by an unusually large 50 basis points, the first reduction in borrowing costs since 2020.

Source: TA Research - 4 Oct 2024