Cautious Ahead of Key Elections in Japan and US

The local market continued trading sideways on Tuesday, with investors still digesting the Budget 2025 contents while mild bargain hunting interest highlight construction stocks. The FBM KLCI shed 3.14 points to close at 1,642.54, off an early low of 1,642.35 and high of 1,648.31, as losers edged gainers 509 to 460 on lower turnover of 2.67bn shares worth RM2.49bn.

Resistance at 1,660/1675; Support at 1,625/1,620

Market sentiment will likely stay cautious, with uncertainties lingering over the upcoming key general elections in Japan and the US keeping investors sidelined. Immediate index resistance remains 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. Immediate support will be the recent correction low of 1,625, with 1,620 and then 1,600 acting as stronger supports.

Bargain Bumi Armada & Dialog

Any further weakness in Bumi Armada should attract bargain hunters looking for rebound upside towards the 61.8%FR (57sen) with stronger resistance coming from the 76.4%FR (63sen) and 07/02/23 high (73sen) ahead, and chart support coming from the 23.6%FR (42sen). Meanwhile, Dialog is attractive to bargain for oversold rebound to the 61.8%FR (RM2.28), with next resistance coming from the 76.4%FR (RM2.43), while key support from the lower Bollinger band (RM2.08) and 38.2%FR (RM2.04) cushion downside risk.

Asian Markets Slip as U.S Presidential Election Looms

Most Asian markets fell on Tuesday as uncertainty over the U.S. presidential election is weighing on market sentiment. With the U.S. election just two weeks away, the rising odds of former President Donald Trump winning the Nov. 5 election are boosting the dollar, since his proposed tariff and tax policies are seen as likely to keep U.S. interest rates high. The election, though, remains tight and too close to call and analysts expect volatility as investors position in the run-up to the results. China's markets were also pinned well below recent highs while traders wait for more details and especially more government urgency and spending to support the ailing economy.

Separately, Japanese traders are keeping one eye on the runup to this coming weekend’s election. Support for Prime Minister Shigeru Ishiba’s ruling coalition is continuing to soften, indicating the possibility that the vote may result in a weakened and unstable administration. Japan’s benchmark Nikkei 225 fell 1.39% to 38,411.96, while the broad based Topix was trading down 1.06% at 2,651.47. Australia’s S&P/ASX 200 was down 1.66% to close at 8,205.70, while South Korea’s Kospi slipped 1.31% to 2,507.70. The Shanghai Composite Index inched higher by 0.54% to 3,285.87, while Hong Kong’s Hang Seng Index gained 0.1% to 20,498.95.

Wall Street Subdued as Treasury Yields Climb

Wall Street's major indexes were subdued overnight as traders mulled prospects for a slower pace of Federal Reserve rate cuts. The Dow Jones Industrial Average ended trading session nearly unchanged, closing at 42,924.89. The S&P 500 fell 0.05% to 5,851.20, while the Nasdaq Composite inched higher by 0.18% to 18,573.13. The weakness on Wall Street partly reflected renewed concerns about the outlook for interest rates following a recent surge by U.S. treasury yields. The 10-year Treasury yields rise from last month's one-year low was first attributed to resilience in the U.S. economy. That triggered a repricing as traders dialed back expectations for Federal Reserve interest-rate cuts. Cautious commentary from Federal Reserve officials on the path of interest rate cuts has also pushed yields higher.

On the earnings front, the steep drop in Verizon’s share price contributed to the dip in the Dow after the company reported third quarter earnings that beat analyst estimates but weaker than expected revenues. Fellow Dow component 3M also moved to the downside even though the industrial conglomerate reported third quarter earnings that exceeded expectations. On the other hand, shares of General Motors spiked by 9.8% after the auto giant reported better than expected third quarter results.

Source: TA Research - 23 Oct 2024