Downward Bias on Weak Sentiment

The local market drifted lower on subdued trade Monday, as sentiment on the local front remain negative amid lack of positive catalysts, ignoring the firmer regional markets as traders awaits key economic data from U.S that may determine how deeply the US will cut interest rates. The FBM KLCI fell 7.83 points to close at 1,610.47, off an early high of 1,630.39 and low of 1,609.87, as losers thrashed gainers 782 to 294 on turnover of 2.45bn shares worth RM2.21bn.

Support at 1,600/1,589; Resistance at 1,648/1660

Given the weak market undertone and buying momentum, the local stock market should stay in downward bias with most investor’s sidelined pending improvement in sentiment. Immediate index support will be at 1,600 psychological level, with next crucial support coming in at the 200-day moving average level of 1,588, and next at 1,575, the 76.4%FR level. Immediate overhead resistance stays at last week’s high of 1,648, with next upside hurdles at 1,660, and Recent Highs of 1,675 and 1,684.

Bargain SunCon & WCT Holdings

SunCon needs a convincing breakout above its upper Bollinger band (RM4.75) to enhance upside potential towards the 100%FP (RM5.13) and RM5.50 going forward, while the 100-day ma (RM4.27) and 61.8%FR (RM3.85) provide crucial support. WCT Holdings needs to rebuild support at current levels to enhance recovery upside towards the 61.8%FR (RM1.00), with stronger upside hurdle coming at the 76.4%FR (RM1.14), while downside is cushioned by the 50%FR (90sen) and 38.2%FR (80sen).

Asian Markets Gain Ahead of U.S. Economic Data

Stocks in Asia closed higher Monday as traders awaited U.S. economic data for fresh insights on the Federal Reserve's monetary policy path and assess political uncertainty in Japan. Data lined up for the week includes the U.S. employment report, job openings, and core Personal Consumption Expenditures (PCE) data, which are vital for assessing the labour market's health and inflation trends. Traders now see a nearly 95% chance of a 25-basis-point cut by the Fed in November. In Japan, political uncertainty will likely weigh on sentiment for traders in Japanese assets after the ruling coalition led by the Liberal Democratic Party failed to win a majority in Parliament for the First Time Since 2009.

Meanwhile, the uncertainty about the outcome of the upcoming U.S. presidential election and rising geopolitical tensions in the Middle East are also weighing on market sentiment. Japan’s Nikkei 225 jumped 1.82% to 38,605.53, while the Topix added 1.51% to 2,657.78. South Korea’s Kospi also gained 1.13% to 2,612.43 and Australia’s S&P/ASX 200 added 0.12% to 8,221.50. The Shanghai Composite Index rose 0.68% to 3,322.20, while Hong Kong’s Hang Seng Index Inched Higher by 0.04% to 20,599.36.

Wall Street Rises Ahead of Earnings, Inflation Data

Wall Street's major indexes closed higher overnight to kick off a pivotal week packed with big tech earnings, an inflation update, and the final stretch before the Nov. 5 presidential election. The Dow Jones Industrial Average advanced 0.65% to end at 42,387.57. The S&P 500 added 0.27% to close at 5,823.52, while the Nasdaq Composite rose 0.26%, closing at 18,567.19. The moves came at the start of a hugely consequential week in markets, with five of the "Magnificent Seven" mega-caps due to release earnings this week. At the same time, traders were also looking ahead to the release of key U.S. economic data later in the week.

The monthly jobs report as well as a report on personal income and spending that includes the Federal Reserve's preferred inflation readings are likely to be in the spotlight. Focus will also be on the U.S. presidential election, with markets more broadly pricing in a second Donald Trump administration, though the election is expected to be close. U.S. crude oil sold off more than 6% after Iranian energy facilities were undamaged during an Israeli attack over the weekend.

Source: TA Research - 29 Oct 2024