Extend Recovery on Policy Support Assurance

The local market extended rebound a second day from Monday’s selloff, led by energy, utility, construction and technology heavyweights, after Japan’s central bank stated interest rates won’t be raised if markets stay volatile. The FBM KLCI climbed 17.48 points to close at 1,591.87, off an early low of 1,563.77 and high of 1,596.60, as gainers led losers 1,061 to 270 on total turnover of 5.12bn shares worth RM4.02bn.

Key Supports at 1,529/1,1520; Resistance at 1,600/1,620

Stocks should extend recovery amid lessening worries over the US economy, geopolitical risks in the Middle East and assurance on monetary policy support from key global central bankers to cushion potential slowdown. Key index supports remains at recent low of 1,529, then 1,520 and 1,500, while immediate resistance on further rebound will be at 1,600, 1,620 and then 1,638.

Bargain MRCB & UEM Sunrise

Technical momentum buy signals on MRCB support further rise towards the 200-day ma (57sen), with breakout to aim for the 138.2%FP (60sen) and 150%FP (63sen) ahead, while the recent low of 47sen and 76.4%FR (46sen) cushion downside. Likewise, UEM Sunrise should recover further to 123.6%FP (RM1.10), with a confirmed breakout to extend rise towards the 138.2%FP (RM1.20) and 150%FP (RM1.29) going forward, and downside capped by recent low of 88sen.

Asian Markets Advance as BOJ Soothes Rate Worries

Stocks in Asia extended gains on Wednesday, after the Bank of Japan’s deputy governor said it won’t raise interest rates if markets are unstable. Bank of Japan’s Deputy Governor Shinichi Uchida noted the recent volatility in Japanese markets, saying the Bank of Japan’s rate path will shift if there’s an impact on the policy outlook. Uchida’s comments offered much-needed reassurance to the market at a time when traders remained concerned whether the recent unwinding of the yen carry trade has run its course. The BOJ’s softening stance also served to remove one major uncertainty as traders continued to assess if the recent global selloff was an overreaction to weak US economic data.

Fears of an imminent U.S. recession had also faded a little as the run of economic data still pointed to solid economic growth in the current quarter. The Commerce Department released a report showing the U.S. trade deficit narrowed in the month of June. The Nikkei rose 1.19% to 35,089.62, while Japan’s broad-based Topix gained 2.26% to end at 2,489.21. Australia’s S&P/ASX 200 ended 0.25% higher to reach 7,699.80 and South Korea’s Kospi gained 1.83% to finish at 2,568.41. The Shanghai Composite was nearly unchanged at 2,869.83, while Hong Kong’s Hang Seng index jumped 1.38% to 16,877.86.

Tech Stocks Lead Major Indexes Lower

Wall Street's main indexes gave up early-session gains and finished lower overnight as technology shares declined, with investor jitters stoked by weak demand in a 10-year Treasury auction. The Dow Jones Industrial Average fell 0.60% to 38,763.45. The S&P 500 declined 0.77% and ended at 5,199.50, while the Nasdaq Composite dropped 1.05% to close at 16,195.81. Stocks initially continued to benefit from bargain hunting, as traders picked up stocks at relatively reduced levels following the recent sell-off. Buying interest waned shortly after the start of trading, however, as a weak USD42 billion sales of Treasuries underscored the fragility of markets in the wake of historic volatility that rattled the financial world.

Chip stocks led the losses, with AI leader Nvidia falling more than 5%. Shares of Super Micro Computer plummeted 20.1% after the server company’s fiscal fourth-quarter earnings missed analyst estimates. The yield on 10-year Treasury’s, which influences mortgages and other borrowing costs, moved higher for the second straight day to 3.97%. Overnight economic data, however, was upbeat as interest rates for the most popular U.S. home loan plunged last week to their lowest levels in 15 months, after the Federal Reserve said it could start cutting rates in September.

Source: TA Research - 8 Aug 2024