Upbeat on Hopes for US Rate Cut Ahead

The local market rebounded on Thursday, led by utility, property and healthcare stocks, on hopes the ECB will move to cut rates and softer US labour market may encourage the Federal Reserve to cut interest rates. The FBM KLCI rose 6.2 points to close at 1,614.73, off an early high of 1,617.05 and low of 1,609.34, as gainers led losers 770 to 475 on robust turnover of 5.35bn shares worth RM4.5bn.

Resistance at 1,640/1,660; Supports at 1,598/1,584

Stocks should remain upbeat on hopes softening US jobs data will influence the Federal Reserve to a more dovish position on US interest rates. Immediate index resistance stays at 1,640, with 1,660 and then 1,680 as tougher upside hurdles ahead. Immediate uptrend supports will be 1,598, then 1,584 and 1,554, the respective 30-day, 50-day and 100-day moving averages.

Bargain Gadang & MRCB

Gadang will need breakout confirmation above the 123.6%FP (49sen) to boost upside momentum and target the 138.2%FP (52sen) and 150%FP (54sen) ahead, while the 50-day ma (42sen) and 100-day ma (40sen) provide uptrend supports. MRCB need to overcome the 50- day ma (67sen) and enhance upside potential to aim for the 200%FP (74sen) and 223.6%FP (79sen) going forward, while the 100-day ma (62sen) and 138.2%FP (60sen) limits downside.

Asian Markets Finish Higher Ahead of ECB Policy Meeting

Most Asian markets rose on Thursday as traders focused on an upcoming European Central Bank policy meeting and soft U.S. labour market data firmed bets of a September Federal Reserve interest rate cut. The European Central Bank is widely expected to cut interest rates for the first time since 2019 when policymakers meet on late Thursday, but traders will watch closely to see whether a slightly higher-than-expected euro zone inflation print released last Friday will affect the central bank’s decision-making. Meanwhile, a report from payroll processor ADP showing private sector job growth in the U.S. slowed by more than expected in the month of May added to optimism about the outlook for interest rates.

With the Fed widely expected to stay on hold next week, the focus of the meeting will be the new Summary of Economic Projections. Back in March, Fed officials maintained their outlook for three rate cuts in 2024. Australia’s S&P/ASX 200 closed 0.68% higher at 7,821.80, as the country’s exports fell to its lowest level since December 2021. In Japan, the Nikkei 225 gained 0.55% to 38,703.51 and the broad-based Topix gained added 0.33% to 2,757.23. In Hong Kong, the Hang Seng index rose 0.28% to 18,476.80, while the Shanghai Composite Index fell 0.54% to 3,048.79. South Korea’s markets were closed for a public holiday.

S&P500 Ends Flat as Traders Await Key Jobs Report

The S&P 500 settled nearly unchanged overnight, with investors largely in wait-and-see mode ahead of the key jobs report on Friday. The S&P 500 slipped 0.02% to close at 5,352.96, while the Nasdaq Composite pulled back 0.09% to 17,173.12. The Dow Jones Industrial Average added 78.84 points, or 0.20%, to finish the session at 38,886.17. Wall Street is looking ahead to Friday’s nonfarm payrolls report for May, with investors on the hunt for signs of a weakening labour market, which could support rate cuts from the Federal Reserve. Economists polled by Dow Jones expect a jobs gain of 190,000. The report also comes after the European Central Bank cut rates for the first time since 2019 on Thursday, raising the pressure on the Federal Reserve to potentially lighten its policy that many see as too restrictive.

The Fed next decides on rates next week and is likely to keep rates the same, though bets that they will cut in September are rising. Stocks are coming off a winning session. The S&P 500 jumped 1.2% to close at a record, while the Nasdaq also hit an all-time high. Nvidia powered those gains to top a USD3 trillion market valuation and surpass Apple in value. Earlier this week, the company announced its next generation of artificial intelligence chips, known as “Rubin.”

Source: TA Research - 7 Jun 2024