Damper from Election Worries in Japan and US

Sideways rangebound trade persisted on Wednesday amid a lack of positive catalysts in the local market, as well as caution over the US elections and its possible impact on the next Federal Reserve rate cut. The FBM KLCI ended down 1.01 points at the day’s low of 1,641.53, off an early high of 1,645.90, but gainers led losers 563 to 471 on better turnover of 3.24bn shares worth RM2.64bn.

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

Local market undertone should remain cautious, with prevailing uncertainties over the potential impact from the upcoming key general elections in Japan and the US dampening investor sentiment. 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 MRCB & UEM Sunrise

Any further dips on MRCB towards the 50.0%FR (51sen) chart support should attract bargain hunting interest for rebound upside towards the 76.4%FR (63sen), with tougher resistance coming from the 100%FP (74sen) and 123.6%FP (85sen). UEM Sunrise will need to climb above RM1.20 to reinforce upside momentum towards the 100%FP (RM1.28) and 123.6%FP (RM1.52) ahead, while the 61.8%FR (88sen) cushions downside risk.

Most Asian Markets Rose on Gaza Cease-Fire Effort

Asian markets mostly rose on Wednesday, as traders react to the Biden administration's renewed efforts to secure a cease-fire in the Middle East. The US secretary of state, Antony Blinken, has arrived in Israel to encourage efforts to revive the stalled Gaza ceasefire negotiations after Israel’s killing of Hamas leader, Yahya Sinwar, last week. Meeting the Israeli prime minister, Blinken urged Benjamin Netanyahu to capitalize on the death of the Hamas leader by securing the release of the 7 October attack hostages and ending the conflict in Gaza. Still, traders are waiting to see how Israel retaliates against Iran for a missile strike earlier this month. In Japan, Japanese subway operator Tokyo Metro’s stellar market debut boosted traders’ optimism. The company raised 348.6 billion yen in its initial public offering, the largest IPO in Japan since 2018.

On economic news, Singapore’s core consumer price index, which excludes private transport and accommodation grew 2.8% in September from a year ago, higher than Reuters poll forecast of 2.7% Australia’s S&P/ASX 200 inched 0.13% higher to close at 8,216.00 and South Korea’s Kospi gained 1.12% to 2,599.62. The Shanghai Composite Index also gained 0.52% to 3,302.80, while Hong Kong’s Hang Seng Index jumped 1.27% to 20,760.15. In Japan, the Nikkei 225 fell 0.8% to end at 38,104.86 and the broad-based Topix dropped 0.55% to close at 2,636.96.

Rising Treasury Yields, Political Uncertainty Weigh on Wall Street

Wall Street's major indexes fell sharply overnight as rising Treasury yields and political uncertainty weighed on market sentiment. The Dow Jones Industrial Average fell 0.96% to close at 42,514.95. The S&P 500 lost 0.92% to 5,797.42, while the Nasdaq Composite dropped 1.60% to 18,276.65. The weakness on Wall Street came amid a continued increase by treasury yields, which have moved sharply higher over the past few sessions. The yield on the benchmark ten-year note has risen to its highest level in almost three months amid worries the Federal Reserve will lower interest rates slower than previously anticipated.

Separately, traders have been increasingly on edge about the prospect of former President Donald Trump winning the election, a possibility for which Wall Street has been preparing to a greater extent. Mega-cap stocks were under pressure, with Apple and Nvidia shares losing more than 2%. Meta Platforms slid 3%, while Netflix and Amazon were lower by roughly 2%. A steep drop by shares of McDonald's also weighed on the Dow after the Center for Disease Control said a severe E. coli outbreak in Mountain West states has been linked to the chain's Quarter Pounders

Source: TA Research - 24 Oct 2024