Sideways to Lower as Market Await Economic Leads

Blue chips stayed range bound on Thursday, as investors contemplate decisions from global central bankers in managing interest rates amid easing inflationary pressures. The FBM KLCI eased 1.32 points to close at 1,624.25, off an early high of 1,626.35 and low of 1,621.44, as losers beat gainers 654 to 442 on cautious trade totaling 3.51bn shares worth RM2.71bn.

Supports at 1,616/1,608; Resistance at 1,638/1,640

The local market should trade sideways to lower ahead of the weekend, as investors await further leads from global economies on growth momentum, inflation and monetary policy. index supports are at 1,616, 1,608 and 1,586, 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 Ekovest & UEM Sunrise

Further weakness on Ekovest is likely to attract buyers ahead of oversold rebound towards the 50%FR (49sen), with a breakout to aim for the 61.8%FR (52sen) and 76.4%FR (56sen) ahead, and key immediate supports at the 23.6%FR (41sen) and lower Bollinger band (40sen) capping downside. UEM Sunrise require renewed buying momentum to overcome the

138.2%FP (RM1.20) and target the 150%FP (RM1.29) and 161.8%FP (RM1.37) going forward, while the 200-day ma (99sen) provides crucial chart support.

Asian Markets Mixed as Traders Digest U.S. Fed, BOJ Decisions

Asian markets were mixed on Thursday, as traders digest announcements from the U.S. Federal Reserve and the Bank of Japan. Federal Reserve Chair Jerome Powell said interest rates could be cut as soon as September if the U.S. economy follows its expected path, putting the central bank near the end of a more than two-year battle against inflation but square in the middle of the nation's presidential election campaign. Separately, the Bank of England is expected to reduce rates by 25 basis points, according to consensus forecasts compiled by Bloomberg, which would be the first cut since the start of the pandemic. However, Japanese stocks sunk by the most since 2020 with weakness across all sectors after the Bank of Japan lifted short-term policy rates and announced plans to reduce monthly bond buying in a hawkish pivot.

On economic front, China's manufacturing activity in July shrank for the first time in nine months as new orders declined, a private sector survey showed on Thursday, boding ill for the country's growth momentum in the second half of 2024. In South Korea, the country’s exports rose at the fastest pace in six months in July, according to preliminary data. Japan’s Nikkei 225 dropped 2.49% to 38,126.33, while the broad-based Topix fell 3.24% to 2,703.69. Australia’s S&P/ASX 200 rose 0.28% to finish at 8,114.70 and South Korea’s Kospi added 0.25% to 2,777.68. The Shanghai Composite fell 0.22% to 2,932.39, while Hong Kong’s Hang Seng index eased 0.23% to 17,304.96.

Wall Street Slumps as Weak Economic Data Stoke Recession Fears

Wall Street's main indexes finished sharply lower overnight after weak economic data raised worries the Federal Reserve may have missed its window to cut interest rates before undercutting the economy’s growth. The Dow Jones Industrial Average dropped 1.21% to end at 40,347.97. The S&P 500 shed 1.37% to end at 5,446.68, while the Nasdaq Composite slipped 2.30% to 17,194.15. Equities initially opened higher, buoyed in part by gains in Meta Platforms after its quarterly results topped expectations and the Facebook parent issued an upbeat outlook for the third quarter. Early gains, however, evaporated after data showed the US manufacturing sector sank further into contraction territory during July.

Other releases showed jobless claims rose to an 11-month high last week and construction spending unexpectedly declined in June. Traders will eye the government payrolls report on Friday for any signs of further weakness in the labour market. Elsewhere, the Bank of England cut rates for the first time in over four years, leaving the Federal Reserve among a dwindling number of central banks yet to cut. Stocks that would suffer the most under a recession were among notable losers during the day’s trading session, including JPMorgan Chase, which lost 2.3%, and Boeing, which fell more than 6%.

Source: TA Research - 2 Aug 2024