Drift-Down Cushioned by Strength in Banks

Bursa Malaysia shares were broadly lower on Monday, save for banking stocks which continued to attract foreign fund purchases, as weak US jobs data sparked concerns over a sharp slowdown in the US economy. The FBM KLCI slid 1.63 points to close at 1,651.49, off an early low of 1,642.31 and high of 1,659.11, as losers swarmed gainers 738 to 333 on total turnover of 3.38bn shares worth RM3.85bn.

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

While the broader market continues to drift lower amid worries over the weaker economy in China and the US, sustained foreign fund buying interest in key banking stocks should cushion downside for the blue-chip index. 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 Maybank & RHB Bank

Maybank need to climb above the 161.8%FP (RM11.07) to fuel upside momentum towards the 176.4%FP (RM11.37) and 200%FP (RM11.86) prior to profit-taking pause, while the rising 50-day ma (RM10.30) provides good uptrend support. RHB Bank will need breakout confirmation above the 29/8/24 high (RM6.28) to enhance upside potential towards RM6.40 and 123.6%FP (RM6.60) ahead, with retracement support from the 76.4%FR (RM5.96) capping downside.

Asian Markets Stumble as Recession Fears Resurface

Stocks in Asia slipped on Monday after another batch of worse-than-expected US jobs data revived fears about a possible recession in the world's top economy. Nonfarm payrolls data on Friday added to signs the US job market is losing steam, fueling debate over how much the Fed should cut interest rates. Traders this week will be keeping a close eye on US inflation data as worries mount that the Fed has waited too long to cut interest rates as recession risks grow. With the central bank set to decide next week, debate is centered on whether it will reduce rates by 25 or 50 basis points. On economic news, China’s inflation rate grew 0.6% year-on-year, lower than the 0.7% expected from economists polled by Reuters. On a monthon-month basis, the CPI rose 0.4%, lower than the 0.5% expected.

Separately, data showed that Japan’s economy expanded in the second quarter at a pace slightly slower than the government’s initial estimate. But it still advanced enough to keep the Bank of Japan on track to raise interest rates later this year. Japan’s Nikkei 225 fell 0.48% to close at 36,215.75, while the broad-based Topix lost 0.68% to 2,579.73. Australia’s S&P/ASX 200 fell 0.32% to 7,988.10 and South Korea’s Kospi slipped 0.33% to 2,535.93. In China, Shanghai Composite index also fell 1.06% to 2,736.49, while Hong Kong’s Hang Seng index dropped 1.42% to 17,196.96.

Wall Street Ends Higher On Bargain Hunting

Wall Street’s major indexes ended sharply higher overnight, as traders snapped up shares trading near their lowest levels and looked ahead to this week’s inflation data for clues on the size of Federal Reserve rate cuts. The Dow Jones Industrial Average gained 1.20% to close at 40,829.59. The S&P 500 added 1.16%, ending at 5,471.05, while the Nasdaq Composite jumped 1.16% to end at 16,884.60. The rally on Wall Street came as traders looked to pick up stocks at somewhat reduced levels following the steep drop seen last week, which dragged the Nasdaq down to its lowest levels in nearly a month. Last week mixed data, particularly the August employment report, also caused traders to dial back expectations that the U.S. Federal Reserve could issue an outsized 50 basis point rate cut when it convenes for its policy meeting next week.

Meanwhile, traders continue to look ahead to the release of closely watched reports on consumer and producer price inflation later this week. The reports are expected to show a slowdown in the annual rate of consumer price growth but an acceleration by the annual rate of producer price growth. U.S. Treasury yields waffled in choppy trading amid uncertainty over the size of the Fed's expected rate cut this month. Nvidia, Tesla and Amazon led gains among the mega caps. JPMorgan Chase, Costco, Amazon and Boeing were also among the winners overnight.

Source: TA Research - 10 Sept 2024