Consolidate on Fresh Worry Over US Growth

Stocks fell on Wednesday, led by the technology (-2.7%), oil & gas (-2.1%) and utility (-1.2%) sectors, and dragged by sharper losses in the region due to renewed fears over US economic growth following the release of weak US manufacturing data. The FBM KLCI slid 6.41 points to close at 1,670.24, off an opening low of 1,662.22 and high of 1,675.53, as losers bashed gainers 813 to 307 on total turnover of 3.04bn shares worth RM2.89bn.

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

The local market should extend profit-taking consolidation in the near-term and mirror the weaker external tone, with fresh worries over US growth dampening sentiment. Immediate index support remains at the recent correction low of 1,633, with 1,620 and 1,600 acting as stronger supports. Key resistance will be the recent 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) of the 1,369 low to the 1,638 high.

Bargain MRCB & UEM Sunrise

MRCB will need breakout confirmation above the 76.4%FR (63sen), matching the 100-day ma level, to boost upside momentum and aim for the 20/5/24 high (74sen) and 123.6%FP (84sen) ahead, while key retracement supports at the 50%FR (51sen) and 38.2%FR (46sen) cushion downside. UEM Sunrise need decisive breakout above the 200-day ma (RM1.02) to fuel upside challenge of the 20/5/24 peak (RM1.28), with next major hurdle seen at the 123.6%FP (RM1.52), and key retracement support from the 50%FR (76sen) capping downside risk.

Asian Markets Slump on Growth Worries

Stocks in Asia tumbled on Wednesday as resurgent worries about U.S. growth drove investors out of risky assets. Two readings of U.S manufacturing production, published Tuesday, showed signs of weakness, pulling markets lower amid renewed fears of an economic slowdown. The Federal Reserve is almost universally expected to lower rates at its next meeting later this month, but there is some disagreement about the pace of rate cuts. Traders were also waiting anxiously for the monthly U.S. jobs report due later in the week, as it is expected to shed more light on the health of the American economy and influence how swiftly the Federal Reserve cuts rates.

Further hurting sentiment was the weakness in tech stocks that rekindled concerns over undue investor frenzy about artificial intelligence. Japan’s Nikkei 225 fell 4.24% to close at 37,047.61, while the broad-based Topix dropped 3.65% to 2,633.49. South Korea’s Kospi lost 3.15%, ending at 2,580.8, while the small cap Kosdaq dropped 3.76% loss to close at 731.75. Australia’s S&P/ASX 200 lost 1.88% to 7,950.5, mainly dragged by a weakness in oil prices. In China, Shanghai Composite index also lost 0.67% to 2,784.28, while Hong Kong’s Hang Seng index dropped 1.1% to 17,457.34.

US Stocks Lower in Shaky Start to September

US stocks fell for a second straight session overnight in a shaky start to September, as chip names struggled and the latest economic data implied slowing growth for the U.S. economy. The Dow Jones Industrial Average rose 38.04 points, or 0.09%, to 40,974.97, the S&P 500 lost 8.86 points, or 0.16%, to 5,520.07 and the Nasdaq Composite slid 52.00 points, or 0.30%, to 17,084.30. Nvidia fell 1.7% following a Bloomberg report that the U.S. Justice Department sent subpoenas to the chipmaker. The move comes after Nvidia tumbled more than 9% Tuesday amid a broader pullback in semiconductors. Some megacap technology and chip stocks regained their footing, with Advanced Micro Devices and Tesla rallying about 3% and 4%, respectively. Meta Platforms, Marvell Technology, Broadcom and Qualcomm edged higher.

Stocks bounced off their lows as the so-called yield curve of the Treasury market momentarily returned to a normal state. The curve had been inverted with the rate on the 10-year note lower than the 2-year yield. This is a common recession signal and had worried investors. On Wednesday, the 10-year yield returned to even with the 2-year yield at one point and briefly went slightly higher. Wall Street fell sharply on Tuesday, with the major benchmarks posting their worst day going back to the sell-off Aug. 5.

Source: TA Research - 5 Sept 2024