Construction & Property Stocks to Highlight

Stocks ended higher Tuesday on late buying interest in construction, property and utility counters, while the broader market extended sideways trade. The FBM KLCI ended flat at 1,635.62 (+0.33), after moving between early low of 1,629.22 and high of 1,638.87, as gainers led losers 567 to 486 on higher turnover of 3.25bn shares worth RM2.67bn.

Support at 1,625/1,620; Resistance at 1,660/1675

The lack of new stimulus measures from China could dampen recent strong optimism in the region, but renewed buying interest in construction and property stocks ahead of Budget should highlight 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 Gamuda & Maxis

Any weakness on Gamuda shares towards the 76.4%FR (RM7.44) or the 100-day ma (RM7.19) should attract buyers looking for rebound upside towards the recent high of RM8.43, with next major hurdles seen from RM8.90 and the 123.6%FP (RM9.41). Dips on Maxis shares towards the 200-day ma (RM3.60) or the 38.2%FR (RM3.42) should encourage buying on weakness ahead of recovery upside towards the 76.4%FR (RM3.98) with next resistance coming from the 16/6/23 high (RM4.32) and the 123.6%FP (RM4.66).

China Rally Lost Steam on Lack of Further Stimulus

The rally in Chinese markets lost steam on Tuesday after a briefing from the country’s National Development and Reform Commission provided few details on further stimulus. While mainland China’s CSI 300 skyrocketed over 10% at the open Tuesday in its return from the Golden Week holiday, the index pared gains to record a gain of 5.93% and end at 4,256.1. Hong Kong’s Hang Seng index briefly plummeted over 10%, before recovering slightly to a smaller loss of 9.4% at its close. Other Asia-Pacific markets mostly fell on Tuesday, with investors watching August pay and spending data out from Japan. Household spending in Japan fell 1.9% year-on-year in August in real terms, a softer fall compared to the 2.6% decline expected by a Reuters poll of economists.

However, real wages rose in August, with data from the country’s statistics bureau indicating that wages climbed 2%. The benchmark Nikkei 225 slipped 1% after the release and closed at 38,937.54, while the Topix was shed 1.47% to end at 2,699.15. South Korea’s Kospi slipped 0.61% to close at 2,594.36, dragged by shares of heavyweight Samsung Electronics after it released worse-than-expected third-quarter guidance. The small cap Kosdaq edged 0.35% lower, closing at 778.24. Australia’s S&P/ASX 200 slipped 0.35% to close at 8,176.9.

Tech Lift Wall Street Higher

Wall Street’s main indexes finished higher overnight as technology shares powered a rebound in the broader market, while traders looked ahead to upcoming U.S. inflation data and corporate earnings. The Dow Jones Industrial Average rose 0.30% to end at 42,080.37. The S&P 500 gained 0.97% to settle at 5,751.13, and the Nasdaq Composite rose 1.45% to finish at 18,182.92. Chipmaker Nvidia led the bounce back in stocks, rising another 4% to close out its fifth straight day of gains amid continued bullishness around artificial intelligence. Other "Magnificent Seven" stocks also regained ground lost amid recent negative headlines, with Amazon, Apple, and Alphabet all finishing the session firmly in the green.

Meanwhile, oil prices retreated as Mideast tensions somewhat cooled. Prices also came under pressure after China failed to roll out another large stimulus package on Tuesday. The move pressured energy stocks, with the S&P sector slumping 2.6%. Marathon Petroleum and Valero Energy shed 7.7% and 5.3%, respectively. Traders are also eyeing Thursday's inflation reading with the release of the latest consumer price index (CPI), while banks are scheduled to kick off the corporate earnings season at the end of the week.

Source: TA Research - 9 Oct 2024