Upbeat as Investors Assess Global Central Bank Policies

The local blue-chip benchmark rebounded on Wednesday, led by banking heavyweights and mirroring regional strength on investor optimism after Bank of Japan raised interest rates and China’s Politburo meeting cued the need for economic stimulus. The FBM KLCI rose 13.63 points to close at 1,625.57, off an early low of 1,611.60 and high of 1,627.94, but losers beat gainers 602 to 480 on higher turnover of 4.42bn shares worth RM3.62bn.

Supports at 1,615/1,608; Resistance at 1,638/1,640

Sentiment should remain upbeat amid hopes for fresh stimulus to boost China’s economy, and as investors assess the monetary policy statements from global central bankers. Immediate index supports are reset to 1,615, 1,608 and 1,585, the respective 30-day, 50-day and 100- day moving average levels, while immediate resistance remains at the recent high of 1,638, with 1,640 and 1,660 as tougher upside hurdles.

Bargain CIMB & RHBBANK

CIMB needs to overcome the 123.6%FP (RM7.64) to boost upside momentum towards the 138.2%FP (RM8.02) and 150%FP (RM8.32) ahead, while uptrend supports from the 50-day ma (RM6.96) and 100-day ma (RM6.77) cushions downside. RHB Bank will need breakout from consolidation and climb above the 123.6%FP (RM5.76) to aim for the 138.2%FP (RM5.88) and 150%FP (RM5.98) going forward, with uptrend supports seen from the 50-day ma (RM5.56) and 100-day ma (RM5.50).

Asian Markets Rebound as Traders Digest Economic Data

Stock markets in Asia rebounded on Wednesday as traders assessed China’s business activity data and braced for key monetary policy decisions from global central bankers this week. Stocks in China soared as traders welcomed a Politburo meeting that stressed the need to boost consumption. Data also showed China's manufacturing activity shrank for a third month in July, keeping alive expectations that Beijing will need to launch more stimulus. Japanese stocks also reversed losses after Japan’s central bank has raised its benchmark interest rate to “around 0.25%” from its previous range of 0% to 0.1% and outlined its plan to taper its bond buying program. Separately, Australia’s second-quarter inflation rose 1% compared to the last quarter, while inflation climbed 3.8% year on year.

Central banks also dominate traders’ attention this week, with the decision from the Federal Reserve also due later in the day with markets expecting the U.S. central bank to stand pat on rates but indicate rate cuts are on the way. Hong Kong’s Hang Seng index jumped 2.01% to finish at 17,344.60, while the Shanghai Composite gained 2.06% to 2,938.75. Japan’s Nikkei 225 also rose 1.49%, reversing earlier losses and closing at 39,101.82, while the broad-based Topix gained 1.45% to 2,794.26. Australia’s S&P/ASX 200 ended up 1.75% to hit a record high of 8,092.30 and South Korea’s Kospi added 1.19% to 2,770.69.

Wall Street Rises on Dovish Fed Remarks

Wall Street's main indexes finished higher overnight as traders digested the Federal Reserve's latest decision to hold interest rates steady and a tech revival sent the Nasdaq surging. The Dow Jones Industrial Average rose 0.24% to end at 40,842.79. The S&P 500 jumped 1.58% to close at 5,522.30, while the Nasdaq Composite popped 2.64% to 17,599.40. The Fed kept its benchmark overnight interest rate in the 5.25%-5.50% range as it ended its two-day policymaking meeting on Wednesday, but opened the door to easing in September, seven weeks shy of the November U.S. elections. During his press conference, Fed Chair Jerome Powell said policymakers discussed the case for cutting rates, but a "strong majority" agreed that now was not the appropriate time.

Traders also poured back into mega-cap tech as chip names soared. Nvidia gained about 12.5%, clawing back some of this month’s losses as the stock headed for its best day since February 22. Other tech stocks such as Apple, Meta Platforms and Amazon were also higher. On economic news, data released overnight showed July U.S. private payrolls increased far less than expected, indicating an easing in persistent labour market tightness. In energy, oil prices rebounded from seven-week lows after the killing of a Hamas leader in Iran ratcheted up tensions in the Middle East and a sharp drawdown in U.S. crude stockpiles.

Source: TA Research - 1 Aug 2024