Consolidate Ahead of Key Inflation Data

Blue chips fell Thursday for profit-taking pullback, with construction, technology and banking heavyweights leading falls, copying weakness in key regional technology names after Nvidia’s results underwhelmed investors. The FBM KLCI shed 21.69 points, or 1.3% to settle at 1,653.55, off an early high of 1,684.68 and low of 1,651.73, as losers swarmed gainers 851 to 316 on reduced turnover of 3.68bn shares worth RM3.97bn.

Supports at 1,633/1,620; Key Resistance at 1,684/1,695

The local market should stall for profit-taking consolidation after recent volatility, while investors await key inflation data from Europe and US for further market direction. Immediate index supports are from the recent correction low of 1,633, then 1,620 and 1,600 as stronger supports. Key resistance will be at yesterday’s high of 1,684, then 1,695, the Dec 2020 high, followed by the 123.6%FP (1,702) and 138.2%FP (1,741).

Bargain SKP Resources & VSI

SKP Resources will need to sustain breakout momentum above the 50%FR (RM1.15) to aid further upside towards the 38.2%FR (RM1.27) and 23.6%FR (RM1.41) ahead, with downside risk capped by the 200-day ma (94sen). VSI need decisive breakout above the 61.8%FR (RM1.10) to increase recovery momentum towards the 76.4%FR (RM1.19) and 15/7/24 high (RM1.34) going forward, while the 50%FR (RM1.02) and 200-day ma (95sen) provide strong supports.

Asian Stocks Track Global Markets Lower

Asian stocks fell on Thursday, following the broadly negative cues from global markets overnight as traders digest Nvidia’s corporate results and await U.S data this week. Nvidia, the darling share of AI slumped more than 7% in post-market trading following a sales forecast that disappointed some on Wall Street. The outlook threatened to cool an AI frenzy that has transformed Nvidia into the world’s second-most-valuable company. Traders now await U.S. weekly jobless claims, which have gained prominence given the Federal Reserve's focus on the health of the labor market, as well as inflation readings from Germany and Spain, for clues on rate-cut prospects beyond September.

The Taiwan Weighted Index lead the losses in Asia. Taiwan Semiconductor Manufacturing Company shares shed 2.07% and Hon Hai Precision Industry dropped 2.16%. In Korea, chip heavyweight SK Hynix plunged over 5%, while Samsung Electronics fell more than 2.6%. Japan’s Nikkei 225 closed nearly unchanged at 38,362.53, while the broad-based Topix ended flat at 2,693.02. Australia’s S&P/ASX 200 fell 0.33% to 8,045.10 and South Korea’s Kospi dropped 1.02% to 2,662.28. In China, Shanghai Composite index fell 0.50% to 2,823.11, but Hong Kong’s Hang Seng index gained 0.53% to 17,786.32.

Wall Street Mixed as Traders Weigh Economic Data, Earnings

Wall Street’s major indexes wavered to a mixed close overnight as traders digest robust U.S. economic data and earnings from AI darling Nvidia. The Dow Jones Industrial Average rose 0.59%, for a fresh record close of 41,335.05. The S&P 500 ended the session just below the flatline at 5,591.96. The Nasdaq Composite slid 0.23% to end at 17,516.43. The early strength on Wall Street partly reflected a positive reaction to the latest U.S. economic data, including a Commerce Department report showing the U.S. economy unexpectedly grew by more than previously estimated in the second quarter. The July Personal Consumption Expenditures report, due late Friday, could offer hints on the central bank's monetary policy easing trajectory.

Meanwhile, the downturn by the S&P 500 and tech-heavy Nasdaq came as shares of Nvidia saw further downside after the AI darling quarterly revenue forecast disappointed traders accustomed to the chipmaker beating expectations by massive margins in recent quarters. Gains in Goldman Sachs, Intel and Visa helped lift the Dow average to a new high. The yield on benchmark U.S. 10-year Treasury notes, which moves inversely to the price, rose 0.8 basis points to 3.841%.

Source: TA Research - 30 Aug 2024