Buoyant On Lower US Rates Into Year End

Local blue chips rebounded from a two-day profit-taking correction on Thursday, led by plantation and telco heavyweights, as hopes increase the US central bank will reduce interest rates in its September meeting. The FBM KLCI regained 6.34 points to end at 1,641.66, off an early low of 1,634.69 and high of 1,642.14, but losers edged gainers 616 to 446 on improved trading volume which totalled 3.73bn shares worth RM3.08bn.

Resistance at 1,660/1,680; Immediate Supports at 1,620/1,600

Stocks should stay buoyant towards the weekend, as investors anticipate the US Federal Reserve will be more dovish in its monetary policy stance and reduce interest rates further towards the year end. Immediate index resistance remains at Tuesday’s high of 1,660, followed by 1,680 and then 1,695, the Dec 2020 high, while immediate supports are at 1,620, then 1,600 and 1,580 as stronger supports.

Bargain Bumi Armada & Wasco

Bumi Armada will need to overcome the 50%FR (53sen) to improve upside momentum and target the 61.8%FR (57sen) and 76.4%FR (63sen) ahead, while the recent selloff low (44sen) and 23.6%FR (42sen) limits downside risk. Meanwhile, Wasco need to rebuild support above the 50%FR (RM1.07), while a breakout confirmation above the 200-day ma (RM1.22) should fuel upside momentum towards the 76.4%FR (RM1.35) and RM1.45 going forward.

Most Asian Markets Buoyed by Rate-Cut Hopes

Asian stocks were mostly higher Thursday after recent meetings from the U.S. Fed reinforced expectations that the central bank would likely cut interest rates in September. The Federal Reserve appears to be very much on track for an interest rate cut in September after a "vast majority" of officials said such an action was likely, according to the minutes of the U.S. central bank's July 30-31 meeting. Markets are likely to get an update of Powell's views on Friday when he speaks at the Kansas City Fed's annual research conference in Jackson Hole, Wyoming. Meanwhile, Bank of Japan Governor Kazuo Ueda will face intense market scrutiny on Friday when he speaks to lawmakers, after the central bank’s hawkish signals contributed to the global market turmoil earlier this month.

On economic news, the Bank of Korea held its benchmark interest rate at 3.5%, in line with expectations. The BOK noted in its release that inflation in South Korea has continued its downward trend, although it did point out that there was a need to monitor real estate prices and household debt. Japan’s Nikkei 225 gained 0.68% to close at 38,211.01, while the broadbased Topix added 0.25% to 2,681.40. In Australia, the S&P/ASX 200 gained 0.21%, ending at 8,027.00 and South Korea’s Kospi added 0.24% to 2,707.67. The Hang Seng index also gained 1.44% to 17,641, while the Shanghai Composite bucked the regional trend to end marginally lower at 2,848.90.

Wall Street Slips Ahead of Powell’s Speech

Wall Street’s major indexes fell overnight as traders turned their focus to a key speech from Fed Chair Jerome Powell at the central bank’s annual Jackson Hole conference. The Dow Jones Industrial Average fell 0.43% to 40,712.78. The S&P 500 slipped 0.89% to close at 5,570.64, while the Nasdaq Composite dropped 1.67% to close at 17,619.35. Federal Reserve Chair Jerome Powell is slated to speak at an annual gathering of central bankers and economists held in Jackson Hole, Wyo. Traders largely expect the Fed to lower interest rates in September, but some are split on the size of the cut. Traders have also kept close watch on economic data that could help determine how aggressively central bankers cut interest rates.

On economic news, fresh data showed the number of Americans filing new applications for unemployment benefits rose in the latest week, consistent with a gradual cooling of the labor market. A slowdown in overall U.S. business activity this month added to the evidence that the economy is slowing and inflation is downshifting, which should allow Fed officials to focus more attention on jobs. The technology sector, which had been leading the stock market higher since the most recent market bottom on Aug. 5, led the losses overnight. Nvidia fell nearly 4% while Amazon and Microsoft were both off more than 2%.

Source: TA Research - 23 Aug 2024