Cautious Ahead of Budget 2025

Stocks fell into profit-taking consolidation mode on Wednesday, mirroring regional weakness which reflect investor disappointment over the lack of concrete stimulus plans from China. The FBM KLCI shed 9.34 points to end at 1,632.63, off an opening high of 1,643.80 and low of 1,629.81, as losers swarmed gainers 700 to 341 on cautious trade totaling 2.79bn shares worth RM3.17bn.

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

Local market sentiment should stay cautious as investors await the Budget 2025 proposal on Friday, with sectors speculated to benefit to attract trading interest. Immediate index resistance remains 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. Immediate support will be the recent correction low of 1,625, with 1,620 and then 1,600 acting as stronger supports.

Bargain DNEX & Unisem

Further decline on DNEX should attract buyers looking for rebound upside, with a climb above the 200-day ma (39sen) to enhance upside potential towards 42sen and the 23.6%FR (46sen) before pausing, while the lower Bollinger band (33sen) and Jan low (31sen) limit downside risk. Unisem will be good to bargain on weakness for recovery upside, with a breach above the 23.6%FR (RM3.25) to aim for the 38.2%FR (RM3.47) and 50%FR (RM3.64) ahead, and support at the 26/9/24 low (RM2.90) and RM2.70 capping downside.

Asian Markets Mixed as Traders Await China Stimulus Details

Stocks in Asia were mixed on Wednesday, as traders awaited concrete details on China stimulus plans and assessed economic data from the region. As Beijing takes its time detailing a fiscal spending plan, skepticism is growing whether authorities are willing to deploy greater firepower to turn around the economy and markets. Traders will be watching for more stimulus measures to prop up the real estate sector in China as its housing minister is set to hold a press briefing on Thursday. Separately, the disappointing outlook from Europe's biggest tech firm ASML dragged down chip stocks from the region.

On economic news, New Zealand reported that its consumer prices index for the third quarter rose 2.2% year on year, in line with economists’ expectations in a Reuters poll. South Korea’s seasonally adjusted unemployment rate came in at 2.5% in September, compared to 2.4% in August. Japan’s Nikkei 225 fell 1.83% to close at 39,180.30, while the broad-based Topix dropped 1.2% to finish at 2,690.66. South Korea’s Kospi fell 0.88% to 2,610.36 and Australia’s S&P/ASX slipped 0.40% to 8,284.75. The Shanghai Composite Index inched higher by 0.05% to 3,202.95, while Hong Kong’s Hang Seng Index slipped 0.16% to end at 20,286.85.

Wall Street Closes Higher as Traders Digest Earnings

Wall Street's major stock indexes ended higher overnight, as traders digested a barrage of earnings results highlighted by Morgan Stanley. The Dow Jones Industrial Average gained 0.79% to end at 43,077.70. The S&P 500 added 0.47% to 5,842.47, while the Nasdaq Composite gained 0.28% to close at 18,367.08. Morgan Stanley climbed 6.5% as traders and bankers joined the rest of their Wall Street rivals in posting better-than-expected revenue, fueling a 32% profit jump for the third quarter. United Airlines also reported better-thanexpected results and forecast strong numbers for the fourth quarter, sending shares 12.4% higher. The reporting period is off to a solid start. About 50 S&P 500 stocks have posted third-quarter earnings thus far, with 79% of those beating expectations, FactSet data shows.

On economic news, the Labor Department released a report this morning showing a continued decrease by prices for U.S. imports in the month of September. Reports on weekly jobless claims, retail sales and industrial production are likely to be in focus as traders look for additional clues about the outlook for the economy and interest rates. Declines by a number of the big tech stocks weighed on the market. Meta Platforms shares lost 1.6%, while Apple shares fell 0.9% and Microsoft shares slipped 0.6%.

Source: TA Research - 17 Oct 2024