Malaysia Market Daily - Rebound on Hints to End of US Debt Deadlock.

 

BUY AirAsia & Tenaga .  FBM KLCI  Resistance at 1,780, Support at 1,763

 

The  local  stock  market  fell  Wednesday  with  blue  chips  suffering  losses  which  forced  the
benchmark  index  to  close  at  the  day’s  low,  as  investors  continued  to  worry  over  the protracted US government shutdown and looming debt ceiling deadline crisis. The KLCI lost 8.38 points to end at 1,769.12, off an early high of 1,775.04, as losers edged gainers 381 to 321  on  flat  total  volume  of  1.51bn  shares  valued  lower  at  RM1.35bn  as  compared  to  the previous day.

With hints emerging overnight that the US shutdown and debt ceiling impasse is nearing an end  as  political  agreement  could  be  reached  soon,  local  blue  chips  should  stage  rebound from yesterday’s slump. Immediate support remains at the 50-day moving average now at 1,763,  with  stronger  supports  from  the  1,747-1,753  gap-up  of  10  September,  and subsequently 1,738, the 38.2% Fibonacci Retracement(FR) level of the 7/2/13 low of 1,597 to  the  all-time  high  of  1,826.  Immediate  resistance stays  at  Monday’s  high  of  1,780,  with tougher hurdles from 1,805, the 20 Sept peak, followed by the July pivot high of 1,811 and all-time high of 1,826.

BUY AirAsia & Tenaga
A  DMI  buy  signal  on  AirAsia  implies  good  rebound  potential,  with  a  confirmed  breakout above the upper Bollinger band (RM2.70) to target RM2.81 (23.6%FR), RM3.01 (38.2%FR) and  RM3.17  (50%FR)  ahead,  while  key  chart  supports  are  at  RM2.49  (Dec  2012  low)  and RM2.44  (Aug  2013  low).  Meantime,  Tenaga  will  need  decisive  breakout  from  current congestion to re-test RM9.41 (19/7/13 peak), with confirmed breakout to target RM10.03, RM10.41 and RM10.72 going forward, while key retracement support is available at RM8.79 (23.6%FR).

Most Asian Stocks Rebound on Janet Yellen’s Appointment News
Most Asian stocks reversed earlier losses as investors in Asia weighed the U.S. government's ongoing  partial  shutdown  against  news  that  President  Barack  Obama  will  nominate  Janet
Yellen as Federal Reserve chairwoman. Asia initially took its lead from the U.S., where Wall Street  fell  Tuesday  as  the  stalemate  in  Washington  fueled  fears  that  the  world's  largest economy might breach the federal debt ceiling, causing the Treasury to default on debt. Mr. Obama  warned  Tuesday  of  "economic  chaos"  if  the  U.S.  fails  to  pay  its  bills.  But  for  the
second day in a row, Asian stocks managed to shake off some of their earlier weakness, with several  markets  moving  into  positive  territory  or  close  to  the  break-even  point  after  The Wall  Street  Journal  reported that  Mr.  Obama  plans  to announce  later  in  the  day  that  he  is
nominating Federal Reserve Vice Chairwoman Janet Yellen as its new leader.

Japan's Nikkei share average recovered from a five-week low on Wednesday, helped by news t hat President Barack Obama has tapped Federal Reserve Vice Chair Janet Yellen to head the U.S. central bank. The news removed some uncertainty hanging over the market and helped risk  appetite,  weakening  the  yen  against  the  dollar.  Meanwhile,  Hong  Kong  shares  fell  on
Wednesday, with investors taking some profit on theoutperforming technology sector as the U.S.  fiscal  impasse  sapped  confidence  that  the  world's  largest  economy  will  avert  a  debt default. Chinese internet giant Tencent Holdings fell more than 2% after closing at a record high  on  Tuesday.  Gainers  for  the  day  were  most  Chinese  property  developers  and  some alternative  energy  counters.  The  next  major  economic  point  for  Asia  will  be  Chinese  data,
with  trade  and  inflation  numbers  scheduled  for  release  over  the  weekend  and  early  next
week. Markets will be looking for more signs of an economic recovery. The  Hong  Kong’s  Hang  Seng  Index  slid  144.88  points  or  0.63%  to  23,033.97  while  the
Singapore’s Straits Times Index rose 8.34 points, or 0.27% to 3,154.84.

 

Dow Creep Higher on Debt Deal Optimism
U.S. stocks staged a slight advance Wednesday, though investors continued to play defense during the ongoing stalemate in Washington. Stocks wavered between mild gains and losses for much of the session. In the latest Washington developments, Republicans and Democrats floated  the  possibility  of  a  short-term  increase  in the  debt  limit  to  allow  time  for  broader negotiations on the budget. At the same time, Obamabegan inviting lawmakers from both parties to the White House for meetings to discuss the government shutdown and raising the debt  limit.  The  slight  shift  in  tone  was  aided  by  a column  by  House  Budget  Committee Chairman Paul Ryan of Wisconsin, who urged a negotiated end to the stalemate but did not mention  Republican  demands  for  linking  changes  in  the  federal  healthcare  law  with government funding.

The  market  was  also  relieved  that  Obama  nominated  Federal  Reserve  Vice  Chairwoman
Janet  Yellen  to  run  the  world's  most  influential  central  bank,  providing  some  relief  to markets that would expect her to tread carefully inwinding down economic stimulus. Yellen, an  advocate  for  aggressive  action  to  stimulate  U.S. economic  growth  through  low  interest rates  and  large-scale  bond  purchases,  would  succeed Fed  chairman  Ben  Bernanke,  whose second  term  ends  on  January  31.  Shares  of  Hewlett-Packard  Co  rallied  more  than  8%   to $22.60 after Chief Executive Meg Whitman said she expects revenue to stabilize in 2014 with "pockets of growth" before the business acceleratesagain in 2015.
The Dow Jones Industrial Average inched up 26.45 points or 0.18% to 14,802.98 while the Standard & Poor's 500 Index added 0.95 points or 0.06% to 1,656.40. The technology-heavy Nasdaq  Composite  Index  fell  17.05  points,  or  0.46%  to  3,677.77,  while  the  financial  index
rose 0.91 points, or 0.34% to 264.43.

 

by TA Securities