Geopolitical Risk Dampens Sentiment

The local market fell into profit-taking correction mode on Wednesday, led by banking, property and utility heavyweights, with market sentiment dampened by the escalating tensions between Russia and Ukraine. The FBM KLCI lost 4.16 points to 1,598.18, off an high of 1,606.28 and low of 1,594.51, as losers beat gainers 546 to 457 on total turnover of 2.72bn shares worth RM2.44bn.

Support at 1,588/1,565; Resistance at 1,630/1,648

Persisting fears over geopolitical risk between Russia and the West and lack of positive catalysts in the local front should continue to dampen sentiment in the near term. Immediate index support remains at 1,588, the 38.2%FR of the 1,529 low (6 Aug) to 1,684 high (29 Aug) rally, with stronger key supports at 1,565, the 23.6%FR level, and then 1,550. Immediate resistance will be at 1,630, next 1,648, the 76.4%FR level, followed by the September peak of 1,675.

Bargain SKP Resources & VSI

A confirmed breakout on SKP Resources above the upper Bollinger band (RM1.10) would enhance upside momentum for share price to target the 38.2%FR (RM1.23), with next significant hurdle being the 23.6%FR (RM1.37). Key support from the 06/08/24 low (95sen) and 76.4%FR (87sen) cushions downside risk. VSI needs breakout confirmation above the 76.4%FR (RM1.19) to boost upside momentum and target the 15/08/24 high (RM1.26), with stronger upside hurdle coming at the peak of 15/07/24 (RM1.33), while crucial supports from the 38.2FR% (95sen) and 23.6%FR (85sen) limit downside risk.

Asian Markets Subdued as Geopolitical Worries Sap Confidence

Asian markets traded in a narrow range on Wednesday as traders keep an eye on a spike in tensions in the Ukraine and digest economic data from the region. Putin has signed a decree amending the country's nuclear doctrine after President Joe Biden gave Ukraine permission to attack Russian territory using U.S.-made long-range missiles. Russian Foreign Minister Sergei Lavrov also said the use of ATACMS was a clear signal the West wanted to escalate the conflict. On economic news, China’s central bank left its benchmark lending rates unchanged on Wednesday after cutting them in October.

Trader also assessed October trade data out of Japan. Export growth came in at 3.1% year over year, topping estimates by economists polled by Reuters and up from a 1.7% drop in September. Japan’s Nikkei 225 slipped 0.16% to 38,352.34, while the Topix fell 0.43% to 2,698.29. Australia’s S&P/ASX 200 fell 0.57% to end the day at 8,326.30, and South Korea’s Kospi gained 0.42% to 2,482.29. In mainland, the Shanghai Composite gained 0.66% to 3,367.99 while Hong Kong’s Hang Seng Index rose 0.20% to 19,702.79.

Wall Street Muted Ahead of Nvidia Result

Wall Street’s main indexes were little changed overnight, as traders awaited AI giant Nvidia’s quarterly results and weighed geopolitical tensions between Russia and the Ukraine. The Dow Jones Industrial Average gained 0.32%, to settle at 43,408.47. The S&P 500 closed little changed at 5,917.11, while the Nasdaq Composite lost 0.11% to close at 18,966.14. Traders are counting on Nvidia's results after the bell, hoping the last of the "Magnificent Seven" tech mega caps announcement can provide some fresh momentum for stocks. The USD3.61 trillion chipmaker, now the world's most valuable company, has seen its stock surge 200% this year so far, hitting record highs after the presidential election.

The weakness on Wall Street also comes amid a nosedive by shares of Target. The retailer slumped 20% after posting its biggest earnings miss in two years and cutting its full-year guidance due to softening discretionary demand and cost pressures. Traders may also be reluctant to make more significant moves as they keep an eye on developments overseas amid escalating tensions between Ukraine and Russia. Overall trading activity appears somewhat subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines.

Source: TA Research - 21 Nov 2024