Middle East Conflict to Cloud Sentiment

Blue chips closed higher on Monday, underpinned by mild buying interest from local funds on selected blue-chip heavyweights amidst the more cautious broader market, while key regional markets rose as investors react to stronger than expected US jobs growth data that eased concerns about the economic outlook. The FBM KLCI gained 5.32 points to close at 1,635.29, off an early low of 1,628.12 and high of 1,637.29, as gainers led losers 548 to 476 on total turnover of 2.76bn shares worth RM2.74bn.

Support at 1,625/1,620; Resistance at 1,660/1667

While market tone is lifted by improved outlook for the US economy following strong jobs growth last month, lingering worries over escalating tensions between Israel and Hezbollah and lack of positive local catalysts should continue to cloud sentiment. Immediate index support will be the recent correction low of 1,625, with 1,620 and then 1,600 acting as stronger supports. Immediate resistance is set at 1,660, followed by the recent highs of 1,675 and 1,684, and then 1,695, the Dec 2020 high, as tougher resistance levels.

Bargain AMMB & Maybank

Any further weakness on AMMB shares to the 100-day ma (RM4.58) or the 200-day ma (RM4.30) should attract buyers looking for rebound upside towards the 161.8%FP (RM5.45), with next resistance seen from the 176.4%FP (RM5.66). Similarly, selling dips on Maybank shares towards the 100-day ma (RM10.02) should encourage bargain hunting ahead of recovery upside towards the 161.8%FP (RM11.07) or 176.4%FP (RM11.37), while stronger retracement support is at the 200-day ma (RM9.51).

Asian Markets Higher on U.S Jobs Report

Asian markets rose on Monday after blowout U.S. labour data dispelled fears of a recession and spurred a sharp paring of rate-cut bets. An upbeat non-farm payroll data helped offset concerns about Middle East tensions and prompted traders to indulge in some brisk buying at several counters from across various sectors. Three central banks are set to release their interest rate decisions this week, namely the Bank of Korea, the Reserve Bank of New Zealand and the Reserve Bank of India. Economists polled by Reuters expect the BOK and RBNZ to cut rates, while the RBI will hold. On the US agenda this week are minutes from the Fed’s September policy meeting, as well as consumer price data.

The gains on the Nikkei were powered by financials and consumer cyclical stocks, with names like Mizuho Financial Group and Mitsubishi UFJ Financial Group among top gainers on the index. Japan’s Nikkei 225 jumped 1.80% to 39,332.74, while the Topix added 1.68% to 2,739.39. Australia’s S&P/ASX 200 rose 0.68% and closed at 8,205.40 and South Korea’s Kospi reversed losses and rose 1.47% to 2,607.42. Hong Kong’s Hang Seng also rose 1.60% to 23,99.78, while mainland China’s markets remained closed for the Golden Week holiday and will return to trade on Tuesday.

Wall Street Lower as Surging Oil Price and Treasury Yields Weigh

US stocks declined, oil prices surged on Monday and Treasury yields climbed, with the benchmark 10-year note topping 4%, as investors readjusted their views for the path of interest rates from the Federal Reserve. The Dow Jones Industrial Average dropped 398.51 points, or 0.94%, ending at 41,954.24. The S&P 500 slid 0.96% to 5,695.94, and the Nasdaq Composite lost 1.18% to close at 17,923.90. The benchmark 10-year Treasury yield rose more than 4 basis points to 4.02%. That marks the first time since August that the yield topped 4%. Oil prices also rose as tensions in the Middle East remain high. U.S. crude climbed more than 3% to settle above USD77 per barrel.

Monday’s moves come after a bumpy week for stocks that saw the major averages grind out modest gains. The S&P 500 added 0.2% last week, while the Nasdaq Composite inched up 0.1% and the Dow added 0.1%. Energy stocks, up about 0.4%, were the only sector in the S&P 500 to close in positive territory. The utilities and consumer discretionary sectors were among the benchmark’s laggards, both down around 2%. Key releases in the week ahead include the Federal Reserve meeting minutes on Wednesday and the consumer price index report on Thursday.

Source: TA Research - 8 Oct 2024