Consolidation on Middle East Tensions Damper

Bursa Malaysia shares fell into profit-taking correction mode on Monday as escalating geopolitical tensions in the Middle East overshadowed the strong gains in China and Hong Kong following China’s stimulus measures. The FBM KLCI shed 11.18 points to close at 1,648.91, off an opening high of 1,661.89 and low of 1,647.28, as losers beat gainers 652 to 488 on total turnover of 4.06bn shares worth RM3.22bn

Supports at 1,633/1,620; Key Resistance at 1,675/1,684

The local market should stay in sideways consolidation, with optimism over the strong ringgit and further interest rate cuts by key global central banks overshadowed by rising geopolitical tensions in the Middle East. Immediate index support is revised lower to the recent correction low of 1,633, with 1,620 and then 1,600 acting as stronger supports. Immediate resistance will be at the recent high of 1,675, with the next high of 1,684, then 1,695, the Dec 2020 high, as tougher resistance levels.

Bargain Genting & GENM

Genting will need breakout momentum to overcome the 38.2%FR (RM4.32) and extend rise towards the 50%FR (RM4.45) and 61.8%FR (RM4.59) ahead, while the lower Bollinger band (RM4.05) cushions downside risk. Similarly, GENM need decisive breakout above the 38.2%FR (RM2.46) to target the 50%FR (RM2.52) and 61.8%FR (RM2.58) going forward, with the lower Bollinger band (RM2.31) cushioning downside risk.

Asian Markets Mixed as Geopolitical Risk Offset China Stimulus

Asian markets were mixed on Monday, as strife in the Middle East offset more stimulus measures in China, while the Nikkei dived on concerns Japan's new prime minister favored normalizing interest rates. Chinese stocks extended one of their most remarkable turnarounds in history, soaring for a ninth straight day as Beijing rolled out further stimulus measures to arrest a slowdown in the broad economy. However, tensions in the Middle East were at risk of escalating once again after Israel’s killing of Hezbollah’s leader, Hassan Nasrallah, in Beirut. Separately, a slump in Japanese stocks also contributed to a decline in the MSCI Asia Pacific gauge, after the victory of Shigeru Ishiba in the Japanese ruling party’s leadership race wrong footed investors.

This week, traders will be paying close attention to Eurozone inflation and manufacturing activity data which are due before the US jobs report on Friday that will help assess the outlook for Federal Reserve rate cuts into the year-end. In the mainland, the Shanghai Composite surged more than 8% to 3,336.50, while Hong Kong’s Hang Seng index jumped 2.43% to 21,133.68. Japan’s Nikkei 225 dropped 4.8% to 37,919.55 and the Topix lost 3.47% to 2,645.4. South Korea’s blue-chip Kospi also fell 2.13% to 2,593.27, while Australia’s S&P/ASX gained 0.70% to 8,269.80.

Wall Street Ends Higher as Traders Parse Powell’s Comments

Wall Street’s main indexes capped off a strong quarter by edging higher overnight as traders reacted to Federal Reserve Chair Jerome Powell vowing to do what it takes to keep the economy humming, while signaling he won't rush future rate cuts. The Dow Jones Industrial Average gained 0.04% to 42,330.15. The S&P 500 added 0.42% and closed at 5,762.48, while the Nasdaq Composite advanced 0.38%, ending at 18,189.17. Stocks rallied into the close, erasing losses seen after commentary from Federal Reserve Chair Jerome Powell. The Fed chief suggested the central bank will continue to lower interest rates but stressed the downward path for rates is not on a preset course.

Powell said the decision to slash rates by half a percentage point earlier this month reflects the Fed's growing confidence that an appropriate recalibration of monetary policy will maintain strength in the labour market and keep inflation moving sustainably down to the 2% target. Looking ahead to the rest of the week, traders are bracing for the September jobs report, due out on Friday, which is seen as posing an important test for the recent rally. Shares of 3M surged more than 33% on the quarter, leading the blue-chip average higher. That would mark its best quarter on record going back to the early 1970s.

Source: TA Research - 1 Oct 2024