Sideways as Market Await Clearer Local Leads

Blue chips stayed range bound on Thursday, with profit-taking on recent gainers checking investor optimism over higher probability for the US Federal Reserve to begin cutting interest rates. The FBM KLCI ended flat at 1,612.94 (+0.59) after oscillating between opening high of 1,614.69 and low of 1,605.69, as losers swarmed gainers 768 to 285 on moderate turnover of 3.57bn shares worth RM2.77bn.

Resistance at 1,620/1,628; Immediate Supports at 1,580/1,550

The local market should extend sideways trade as investors search for clearer local leads ahead of the weekend, while market undertone remains upbeat given recent tamer US inflation data which should encourage the US Federal Reserve to ease monetary policy. Immediate index resistance stays at 1,620, followed by 1,628 and then 1,638, while immediate supports are at 1,580, then 1,550 and recent low of 1,529, with 1,520 and 1,500 as stronger supports.

Bargain Genting Berhad & GENM

Genting Berhad need to overcome the 50%FR (RM4.52) constructively to sustain recovery momentum and aim for the 61.8%FR (RM4.66) and 76.4%FR (RM4.83) ahead, with downside cushioned by the recent steep selloff to the 23.6%FR (RM4.21). GENM will need confirmed breakout above the 50%FR (RM2.58) to target the 61.8%FR (RM2.65) and 76.4%FR (RM2.72) going forward, with the Oct 2023 pivot low (RM2.32) acting as crucial chart support to limit downside risk.

Asian Markets Rise on Fed Rate-Cut Wagers

Stocks in Asia rose on Thursday after benign consumer inflation data overnight reinforced bets for the Federal Reserve to start cutting interest rates next month. Regional equities took their lead from gains on Wall Street after U.S. consumer prices increased at the slowest pace since early 2021. The inflation prints bolstered forecasts for a Fed rate cut next month. The swaps market is currently fully pricing in one 25 basis-point reduction in September and 100 basis points of cuts through year-end, indicating a degree of confidence that the central bank will deliver one half-point cut in the remaining three meetings of 2024. On economic front, Japan’s second-quarter gross domestic product beat market expectations on a quarter-onquarter basis, climbing 0.8% compared to forecasts of a 0.5% rise from economists polled by Reuters.

Separately, China's factory output rose 5.1% from a year earlier in July but slowed from the 5.3% pace in June, reflecting languid domestic demand that could prompt more policy support to bolster the country's patchy economic recovery. Japan’s Nikkei 225 climbed 0.78% to close at 36,726.64, while the broad-based Topix added 0.73% to 2,600.75. Australia’s S&P/ASX 200 saw a smaller rise of 0.19%, ending at 7,865.50, while the Shanghai Composite gained 0.94% to 2,877.36. In Hong Kong, the Hang Seng Index ended flat at 17,109.14 (-4.22) and South Korea are closed for a public holiday.

Wall Street Rallies as Retail Sales Soothe Slowdown Fears

Wall Street's three major stock indexes ripped higher overnight after better-than-expected retail sales and the labor market data allayed recessionary fears and kept bets intact for a September rate-cut by the Federal Reserve. The Dow Jones Industrial Average rose 1.39% to end the day at 40,563.06. The S&P 500 gained 1.61% to 5,543.22, while the Nasdaq Composite jumped 2.34% to 17,594.50. The rally on Wall Street came as the Commerce Department released a report showing much stronger than expected retail sales growth in July, easing concerns about the economic outlook. A separate reading also showed the number of Americans filing new applications for unemployment benefits fell unexpectedly last week.

Traders have cautiously eyed this week's economic data releases, the last set before Fed Chairman Jerome Powell delivers a much-awaited speech at Jackson Hole next week. Walmart's stock surged more than 6% after a largely positive report in which it posted both earnings and revenue beats. The company also raised its full-year outlook. Elsewhere, Cisco Systems jumped 7% after announcing a fiscal fourth-quarter earnings and revenue beat and cuts to its global workforce.

Source: TA Research - 16 Aug 2024