Cautious Amid Fresh Middle East Tensions

Bursa Malaysia shares traded sideways on Monday, as investors digested the US Fed Chief’s dovish views on the US economy while renewed geopolitical tensions in the Middle East capped gains. The FBM KLCI gained 3.22 points to close at 1,638.96, off an early high of 1,643.95 and low of 1,634.72, but losers beat gainers 578 to 506 on cautious trade totalling 2.82bn shares worth RM2.62bn.

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

The local market should continue to trade range bound with cautious undertone given the fresh tensions in the Middle East, while awaiting more key inflation data from the US. Immediate index resistance remains at the recent 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 Gamuda & WCT Holdings

Gamuda needs to overcome the upper Bollinger band (RM7.90) to enhance upside momentum for re-test of the 18/7/24 peak (RM8.38), with next hurdle seen at RM8.90, while key retracement support from the 61.8%FR (RM6.79) limits downside. Meantime, WCT Holdings will need decisive breakout above the 76.4%FR (RM1.14) to improve upside potential towards the 23/7/24 high (RM1.35), while next major hurdle is at the 123.6%FP (RM1.56), and key retracement support at the 50%FR (90sen) cushions downside.

Asian Markets Mixed on Middle East Tensions

Asian stocks were mixed on Monday as traders assessed dovish comments from U.S. Federal Reserve Chairman Jerome Powell and escalating tensions in the Middle East. Traders in the region is bracing for an expanded conflagration after Israeli warplanes swooped over southern Lebanon, taking out thousands of Hezbollah missile launchers in what was called a pre-emptive strike. Meanwhile, the prospect of the US finally easing borrowing costs is shaping trading across financial markets after Federal Reserve Chair Jerome Powell said the time had come to start easing policy and emphasized that the central bank did not want to see further weakening in the labour market.

Figures on U.S personal consumption and core inflation are due on Friday, along with a flash reading on European Union inflation. Analysts generally assume the data will be benign enough to allow for rate cuts in September. Japan’s Nikkei 225 fell 0.66% to close at 38,110.22, while the broad-based Topix lost 0.87% to 2,661.41. In Australia, the S&P/ASX 200 gained 0.76%, ending at 8,084.50 and South Korea’s Kospi slipped 0.14% to 2,698.01. In China, Shanghai Composite was nearly unchanged at 2,855.52 while the Hang Seng index gained 1.06% to 17,798.73.

Wall Street Mixed Ahead Of Nvidia Earnings

Wall Street’s major indexes wavered to a mixed close overnight as traders braced for a busy week dominated by Nvidia's earnings report and awaited inflation data for clues about the path of interest-rate cuts by the Federal Reserve. The Dow Jones Industrial Average rose 0.16% to finish at 41,240.52. The S&P 500 slipped 0.32% to 5,616.84, while the Nasdaq Composite lost 0.85% to end the day at 17,725.76. AI chip giant Nvidia dropped 2.25% ahead of its report on Wednesday in what is set to be the U.S. stock market's most closely watched event of the week. Some traders worried that anything short of a stellar forecast from Nvidia could shatter Wall Street's rally in AI-related companies, including Microsoft, Alphabet and Meta Platforms.

Meanwhile, Friday's highly anticipated Personal Consumption Expenditure data for July, the central bank's preferred inflation gauge, could provide more insight into the policy easing trajectory. Of the 11 S&P 500 sector indexes, six declined, led lower by information technology, down 1.12%, followed by a 0.81% loss in consumer discretionary. The energy sector index jumped 1.11% following reports of oil supply disruptions amid the geopolitical conflict in the Middle East lifted crude prices.

Source: TA Research - 27 Aug 2024