Sideways Ahead of Hari Raya Haji Weekend Break

Blue chips staged mild rebound on Thursday, mirroring regional gains after the US Federal Reserve held interest rates steady but shifted its dot plot to only one rate cut this year and a more aggressive four rate cuts in 2025. The FBM KLCI rose 1.22 points to close at 1,610.17, off an early high of 1,616.84 and low of 1,609.13, as gainers led losers 798 to 447 on lower turnover of 5.91bn shares worth RM4.35bn.

Supports at 1,602/1,589; Resistance at 1,632/1,640

Stocks should trade sideways ahead of the long weekend break due to the religious Hari Raya Haji holiday, and as investors shift focus to Bank of Japan’s monetary policy decision. Immediate index supports are at 1,602, the rising 30-day moving average, with 1,589 and 1,559, the respective 50-day and 100-day moving averages, acting as stronger supports. Immediate resistance remains the recent high of 1,632, with 1,640, 1,660 and then 1,680 as tougher upside hurdles.

Bargain Genting Berhad & Genting Malaysia

Genting Berhad should attract buyers on weakness towards chart supports from the 50%FR (RM4.60) or 200-day ma (RM4.55), while sustained strength above the 61.8%FR (RM4.74) should aim for the 76.4%FR (RM4.92), with next hurdle seen at the 11/3/24 peak (RM5.20). GENM should anticipate bargain hunters to cushion downside at 23.6%FR (RM2.52), with next key support from the 21/22/22 pivot low (RM2.40), while a decisive break above the 50%FR (RM2.67) should target the 61.8%FR (RM2.73) and 76.4%FR (RM2.81) ahead.

Asian Markets Mixed Amid Hawkish Fed

Asian markets were mixed in Thursday trade, as traders weighed cooling U.S. inflation against a more hawkish posture by the Federal Reserve. The closely watched U.S. CPI report showed core prices growing at their slowest annual pace in over three years last month. However, traders were whipsawed later as Fed official’s trimmed projections for interest rate reductions this year to a single quarter-point cut. In his post-meeting press conference, Fed Chair Jerome Powell said the rate-path decision was a "close call" for many policymakers, and to some degree the Fed had merely traded an earlier start to rate reductions this year by tacking an additional anticipated cut onto 2025.

Meanwhile, the Bank of Japan starts its two-day policy meeting with a decision due on Friday. While authorities are expected to keep rates on hold, they are widely seen to consider reducing bond purchases. Australia’s ASX 200 gained 0.44% to 7,749.70, and South Korea’s Kospi rose 0.98% to 2,754.89. In Japan, the Nikkei 225 fell 0.40% to 38,720.47, while the broad-based Topix lost 0.89% to 2,731.78. In Hong Kong, the Hang Seng index rose 0.97% to 18,112.63, and the Shanghai Composite Index slipped 0.28% to 3,028.92.

Tech Stocks Boost S&P 500 and Nasdaq

The S&P 500 and Nasdaq registered record closing highs for a fourth session in a row overnight as technology shares extended their recent rally. The Dow Jones Industrial Average slipped 0.17% to close at 38,647.10. The S&P 500 gained 0.23% to finish the session at 5,433.74, and the Nasdaq Composite added 0.34% to 17,667.56. It was the fourth consecutive record close for the two indexes. A 3% rise in Nvidia and a 12% pop from Broadcom after reporting quarterly results helped spur the broader rally in tech. Microsoft and Apple also hit record highs overnight. Tech is the only sector to outperform the S&P 500 over the past month and is now the leading sector of the year. However, shares of Salesforce and Amazon fell 2.9% and 1.6% respectively, dragging the Dow Jones Industrial Average into negative territory.

Treasury yields also declined for a third day in a row. The yield on the benchmark 10-year note slipped to 4.239%, down from 4.294% on Wednesday. On economic news, the Labor Department's Producer Prices Index came in significantly lower than analysts had expected, dipping 0.2% in May on a monthly basis, while rising 2.2% year-on-year, or 20 basis points above the Fed's 2% annual inflation target. The Labor Department also released a separate report showing an unexpected increase by first-time claims for U.S. unemployment benefits in the week ended June 8th.

Source: TA Research - 14 Jun 2024