Range Bound Pending Clearer Market Leads

The blue-chip benchmark index staged a strong rebound on Tuesday, led by technology, telco, plantation and banking heavyweights, as investors returned to bargain hunt after the recent profit-taking spell. The FBM KLCI rose 18.72 points, or 1.2 percent, to close at 1,615.40, off an opening low of 1,595.35 and a high of 1,617.41, as gainers led losers 666 to 545 on a total turnover of 4.46bn shares worth RM3.94bn.

Resistance at 1,640/1,660; Supports at 1,595/1,582

Stocks should stay range-bound pending clearer market leads as investors await the closely watched ECB decision on interest rates and more US data to gauge the health of the world’s largest economy. Immediate index resistance stays at 1,640, with 1,660 and then 1,680 as tougher upside hurdles ahead. Immediate uptrend support will be 1,595, matching yesterday’s low, then 1,582 and 1,552, the 50-day and 100-day moving averages, acting as stronger supports.

Bargain Hartalega & Kossan

Hartalega looks set to rebuild support at current levels pending recovery towards the 123.6%FP (RM3.44), with a confirmed breakout to aim for the 138.2%FP (RM3.68) and 150%FP (RM3.87) ahead, while the 30-day ma (RM3.08) and 50-day ma (RM2.93) cushions downside. Kossan needs to overcome the 123.6%FP (RM2.44) to enhance upside momentum towards

the 138.2%FP (RM2.59) and 150%FP (RM2.71) going forward, with the 50-day ma (RM2.19) and 100-day ma (RM2.08) capping downside risk.

Asian Markets Mixed as Traders Digest Weak U.S. Data

Asian markets ended a choppy session mixed on Tuesday, as traders weighed concerns about the health of the US economy against stronger expectations for early Federal Reserve policy easing. While the latest soft US manufacturing data revived bets for the Fed to cut rates sooner, it also raised concerns about the potential drag on Asian economies. The mixed picture across asset classes suggests traders may be waiting for more US data, such as Friday’s crucial jobs figures, for more clues about the outlook of the world’s No. 1 economy and its central bank. Separately, traders expect the European Central Bank on Thursday to cut the benchmark rate by 25 basis points to 3.75%.

On economic news, South Korea’s consumer inflation slowed in May, official data showed, with the pace of increase coming in below expectations. The consumer price index increased 2.7% in May from a year ago, rising at its slowest pace since July, according to LSEG data. Japan’s Nikkei 225 fell 0.22% to 38,837.46 and the broad-based Topix lost 0.38% to 2,787.48. Australia’s S&P/ASX 200 also fell 0.31% to 7,737.10, while South Korea’s Kospi dropped 0.76% to 2,662.10. On the mainland, the Shanghai Composite Index gained 0.41% to 3,091.20 and Hong Kong’s Hang Seng index added 0.31% to 18,459.32.

Wall Street Finish Higher on Weak Job Data

Wall Street's main indexes ended higher in choppy trading overnight after softer-thanexpected labour-market data reinforced bets the Federal Reserve will still be able to cut interest rates later this year. The Dow Jones Industrial Average climbed 0.36% to close at 38,711.29. The S&P 500 added 0.15% to finish the session at 5,291.34, and the Nasdaq Composite advanced 0.17% to 16,857.05. Stocks have struggled to find a footing in recent days as investors face uncertainty over the path of interest rates. Recent weak manufacturing data has prompted Wall Street strategists to scale back their optimism for economic growth, which supports a case for rate cuts. New government data overnight showed that job openings fell in April to their lowest level since February 2021 as the labour market shows further signs of rebalancing.

The weak jobs data also sent U.S. Treasury yields lower, with the 10-year Treasury rate down 6.6 basis points to 4.335%, according to FactSet data. The labour market update serves as a precursor to the crucial May jobs report on Friday. Traders have adjusted their expectations for rate cuts in recent days, according to the CME Fed-Watch tool. Almost two-thirds now expect at least one cut by the Fed's September meeting, a sizable gain from one week ago. Dow Inc., 3M and Caterpillar fell more than 1%, keeping gains for the blue-chip index in check. Bath & Body Works was the worst-performing stock in the S&P 500, losing nearly 13% on the back of disappointing guidance.

Source: TA Research - 5 Jun 2024