Asian equity markets headed towards multi-year highs with strong momentum and higher trading volumes on Tuesday. The rally seemed ‘unstoppable’ amid improving fundamental elements and removal of uncertainties surrounding central bank policies. Investors’ confidence was reinforced by favourable third quarter earnings globally and an ample liquidity environment.
Hang Seng Index has broken out through a major resistance level of 28,900 points (200% Fibonacci extension) and completed a 200% Fibonacci Extension of a big rally starting early this year. Traders need to monitor its movement in the days to come. If 28,900 holds, the chance that it could move on to challenge the key psychological level of 30,000 points is much higher. Market participants remains optimistic on the earnings outlook through 2018, especially in the technology, consumer, finance and healthcare sectors.
STI has also broken out above 3,400 points today, lifted by banks (DBS, UOB), offshore & marine (Kep Corp, Sembmar) and property (Capitaland, Hongkong Land). STI’s next major resistance is 3,547 points - the peak in 2015.
This week’s big earnings include SingTel will be closely watched, but downside is pretty much cushioned by cheap valuations. The Straits Times Index is trading at around 11.7 times Price-to-earnings, still among the cheapest in Asian markets.
CapitaLand - Singapore’s largest property developer – sprung a surprise with a 28% jump in its 3Q profit, thanks to better operating performance and fair value gains from its China and Singapore properties. The net profit rose to S$317 million from $247 million a year ago. Earnings per share (EPS) came in at S$0.05, beating Bloomberg’s consensus of $ 0.045.
Genting Singapore and SIA have also beat market expectation by 27% and 78% respectively in the third quarter.
Separately, Brent oil price saw some pullback near $64.6 area as this is a key Fibonacci extension level. USD/JPY retraced back to 113.78 area this morning as it failed to breakout through the psychological resistance at 114.0 again.
Brent – Cash
- The 10-Day Simple Moving Average and SuperTrend (10,3) are both sloped upwards, suggesting uptrend remains intact
- First broke through strong resistance level at around 28,900 area, which is the 161.8% Fibonacci Extension level. Whether or not this level holds on is critical
- Immediate support level is at 28,000 area
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