Morning Dew - 4 October 2013

Key Points

• Another positive finish by JCI as the index gained 0.71% throughout the Thursday session. Better-than-expected Chinese service PMI has managed to keep the mood positive in Asia despite the US government remains shut down after budget talks failed to reach agreement between the Republicans and the Democrats. Talks remain in progress however, and the longer it takes to yield a deal, the more likely the market sentiment will deteriorate.
• After its manufacturing PMI came in short of expectations, Chinese PMI for the service sector managed to rise to a six-month high, signalling that there are signs of improvements in China after two quarters of contractions. In September, the index registered an uptick to 55.4 from August 53.9. A reading above 50 signifies expansion while below 50 signifies contraction.
• Despite rising, JCI technical outlook still demand caution as the index is yet to break through its resistance area around 4425-4452. Even if it does, lack of positive catalysts may make it difficult to take out its subsequent resistance at 4540. Still, JCI seems to be holding well above its support at 4313. It is expected to stay above this key area throughout Friday as it may attempt to test its resistance at 4425-4452.
• US stocks fell as shutdown remains in force as well as driven by poor economic data. ISM for non-manufacturing fell from 58.6 to 54.4 in September. Hence, despite the sector continued to expand, the pace had slowed more than expected. The market had expected the data at 57.0. Jobless claims also fell as employers anticipated shutdown by keeping their workers. Nonfarm payrolls data which was scheduled for Friday release will be postponed due to government shutdown.

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