Drift-Down on Lacking Positive Local Leads

The local market drifted lower on Thursday, with worries over weaker oil prices and China’s slowing economy due to the fragile property market dampening market tone. The FBM KLCI lost another 2.97 points to close at 1,442.85, off an early high of 1,447.66 and low of 1,441.02, as losers swarmed gainers 603 to 322 on higher trade totalling 3.01bn shares worth RM1.98bn.

Better Support at 1,430/1,400; Resistance at 1,465/1,470

Stocks should extend drift-down ahead of the weekend on lack of positive domestic market leads, and as investors brace themselves for the closely watched US jobs data for clues on the US inflation trend. Better index chart supports are at 1,430, and 1,400/1,390, while the end June low of 1,370 will act as crucial support. Immediate resistance is still at 1,465/1,470, with the 1,490/1,500 area acting as tougher upside hurdle.

Bargain AMBank & CIMB

AMBank need breakout confirmation above the 28/11/23 high (RM4.10) to fuel further upside momentum towards the 123.6%FP (RM4.36) and 138.2%FP (RM4.53) ahead, while downside is cushioned by the 100-day ma (RM3.80). CIMB will be attractive to bargain on weakness for eventual breach above the 123.6%FP (RM5.90) to aim for 138.2%FP (RM6.09) and 150%FP (RM6.24) going forward, while uptrend support from the rising 100-day ma (RM5.55) cushions downside.

Weak Oil and China Worries Weigh on Asian Markets

Asian markets fell with Wall Street on Thursday, pressured by weak oil prices and concerns about China’s fiscal health. Driving the weakness in equities in the region were declines in energy producers after oil fell to its lowest since June on concerns about oversupply, as well as worries over China’s debt burden after Moody’s Investors Service lowered its view on a number of local companies. Further souring investor mood was a surprise contraction in China’s imports in November from a Covid-hit period one year ago, dashing hopes that domestic demand would rebound from a low base to spur growth in a slowing economy.

Separately, Australia’s trade surplus in October widened to 7.13 billion Australian dollars, but missed Reuter’s poll estimates of 7.5 billion. Japan’s Nikkei 225 dropped 1.76% to 32,853.31, and the Topix fell 1.14% to 2,359.91. South Korea’s Kospi also fell 0.13% to 2,492.07, while the small-cap Kosdaq lost 0.77% to 813.20. In Australia, the S&P/ASX 200 inched lower by 0.07% to 7,173.30, while the Shanghai composite index inched down by 0.09% to 2,966.21.

Tech Stocks Lead Wall Street Higher

Tech stocks led the US major averages higher overnight as traders looked again to labor market data for signposts to the path of interest rates. The Dow Jones Industrial Average rose 0.17% to 36,117.38. The S&P gained 0.80% to 4,585.59, while the Nasdaq Composite jumped 1.37% to 14,339.99. The strength on Wall Street may partly reflect ongoing optimism about the outlook for interest rates ahead of the release of the Labor Department's closely watched monthly jobs report. A Labor Department jobs report due on late Friday could hint at how quickly the U.S. economy is softening and may sway expectations about when the Fed is likely to begin cutting rates. Meanwhile, weekly jobless claims released overnight were below economist expectations and a reading of continuing jobless claims declined, indicating that the pace of layoffs hasn’t increased.

Tech stocks led the gains with Alphabet shares surging almost 6% after the company’s launch of its Gemini artificial intelligence model. AMD soared more than 9% after the company estimated the potential market for its data center AI chips could reach USD45 billion this year. Other heavyweight tech-related stocks also gained, with Nvidia and Amazon climbing nearly 2%, Meta Platforms rising 2.8% and Apple up about 1% in a Magnificent 7 led rally in markets. Limiting gains in the Dow, shares of Merck fell 1.2% after the drug-maker’s immunotherapy combination failed in a lung cancer study.

Source: TA Research - 8 Dec 2023