Sideways Pending Local Catalyst

Bursa Malaysia shares extended listless trade on Monday, with profit-taking in the healthcare, utility and technology sectors dampening sentiment. The FBM KLCI ended 0.71 points lower at 1,589.66, after ranging between early low of 1,582.78 and high of 1,594.09, as losers swarmed gainers 914 to 302 on total trade of 5bn shares worth RM3.78bn.

Stronger Supports at 1,564/1,550; Resistance at 1,622/1,632

Stocks should sustain sideways trading in the immediate term, as investors stay sidelined pending fresh local catalysts to lift market tone. Stronger index supports are at 1,564, the 100- day moving average level, and 1,550, while immediate resistance is at the early June high of 1,622, with the May high of 1,632 and 1,640 as tougher upside hurdles.

Bargain Sime Darby & TM

Sime Darby looks attractive to bargain at current levels, with key chart support nearby at the 200-day ma (RM2.50) cushioning downside, while a confirmed breakout above the 100-day ma (RM2.67) should aim for the 123.6%FP (RM2.89) and 138.2%FP (RM3.00) going forward. TM should be well cushioned by uptrend supports from the rising 30-day ma (RM6.41) and 50-day ma (RM6.30), while a convincing breakout above the 150%FP (RM6.80) should target the 161.8%FP (RM6.97), 176.4%FP (RM7.18) and 200%FP (RM7.51) going forward.

Asian Markets Mostly Lower as Investors Await Inflation Data

Asian markets mostly fell on Monday as investors awaited inflation data from Australia and Japan later this week. Australia’s May consumer price index reading, due on Wednesday, will be in focus after Reserve Bank of Australia Governor Michelle Bullock revealed the central bank discussed hiking rates at its last meeting. Should inflation come in higher than expected and spur the RBA to raise rates, it would be the first major Asia-Pacific central bank to do so in an environment where investors are waiting for rate cuts, barring Japan. Australia’s S&P/ASX 200 fell 0.8%, closing at 7,733.7. Japan’s Nikkei 225 was up 0.54% at 38,804.65, while the Topix was 0.57% higher and finished at 2,740.19.

On Monday, the Bank of Japan revealed it discussed raising interest rates during its June monetary policy meeting. Last week, BOJ Governor Kazuo Ueda reportedly told the country’s parliament that the central bank could raise rates as soon as its July meeting. Hong Kong’s Hang Seng index ended flat, while mainland China’s CSI 300 marked a fourth straight day of losses, shedding 0.54% to 3,476.81. China reported a 2.8% fall in fiscal revenue for the first five months of 2024 compared to 2023, widening from a 2.7% year-on-year fall from January to April. For May alone, fiscal revenue was down 3.2% year on year, a softer fall than the 3.7% slide in April. South Korea’s Kospi dipped 0.70% to end at 2,764.73.

Dow Ends Higher as Investors Snap Up Energy and Bank Stocks

The Dow Jones Industrial Average climbed overnight as investors sold big technology names in favour of other sectors such as banks and energy. The Dow advanced 260.88 points, or 0.67%, to close at 39,411.21. The S&P 500 slid 0.31% to 5,447.87, while the tech-heavy Nasdaq Composite declined 1.09% to 17,496.82. Information technology was the biggest declining S&P 500 sector for the day, falling more than 2%. Meanwhile, energy advanced 2.7%, and financials and utilities were up roughly 1%. Dow member JPMorgan Chase gained 1.3%, while Goldman Sachs and Chevron climbed more than 2% each. Nvidia fell about 6.7%, adding to its 4% decline last week that snapped an eight-week winning streak. The pullback occurred after Nvidia briefly dethroned Microsoft as the most valuable company in the U.S. Despite the selloff, the shares are still up nearly 140% for the year.

The enthusiasm surrounding artificial intelligence has lifted the market significantly this year even as investors grappled with shifting expectations for rate cuts and a slowing economy. The S&P 500 has advanced 14% this year after notching 31 record closes. Investors will receive key inflation data this week in the form of May’s personal consumption expenditure data. The Federal Reserve’s preferred inflation gauge is set to be released Friday. Stocks are coming off a record-setting week, with the S&P 500 and Nasdaq notching fresh all-time highs as Wall Street heads into the final week of June and the end of the first half of 2024.

Source: TA Research - 25 Jun 2024