Range Bound Pending Positive Local Cues

The local blue-chip benchmark index stayed range bound on Tuesday as profit-taking on telco and plantation heavyweights checked gains in construction, technology and energy stocks. The FBM KLCI ended flat at 1,597.96 (-0.24), off an early high of 1,602.52 and low of 1,595.62, as gainers led losers 715 to 459 on stronger trade which totalled 5.39bn shares worth RM3.99bn.

Resistance at 1,622/1,632; Stronger Supports at 1,567/1,550

Range bound trade should prevail, pending more solid positive domestic cues to lift the market from the current trading range. Immediate index resistance will be the early June high of 1,622, with the May high of 1,632 and 1,640 as tougher upside hurdles, while stronger supports are at 1,567, the 100-day moving average level, followed by 1,550.

Bargain Globetronics & Inari

Globetronics need to overcome the 61.8%FR (RM1.51) to enhance upside momentum towards the 76.4%FR (RM1.63), with next hurdle seen at the 18/12/23 high (RM1.83), while good support is available from the 38.2%FR (RM1.31). Inari will need decisive breakout above the 150%FP (RM3.95) to fuel further upside towards the 161.8%FP (RM4.09) and 176.4%FP (RM4.26) ahead, with uptrend support from the rising 30-day ma (RM3.53) cushioning downside.

Asian Markets Subdued Ahead of Fed Comments

Asian markets fluctuated in a narrow range Tuesday, as traders awaited comments from Federal Reserve Chair Jerome Powell and weighed the possibility of another Donald Trump presidency in the wake of his debate with Joe Biden last week. Traders will look for cues on rate cuts when Powell speaks later in the day. Next on their radar are ADP employment, ISM services PMI data and minutes of the Fed's last policy meeting due on Wednesday and the nonfarm payrolls report scheduled for release on Friday. Meanwhile, benchmark 10-year Treasury yields rose nearly 14 basis points to 4.479% overnight, with analysts attributing the move to expectations of Donald Trump winning the U.S. presidency and raising tariffs and government borrowing.

On economic news, South Korea's consumer inflation weakened to an 11-month low in June as supply-side pressures eased, official data showed on Tuesday, coming in below market expectations and providing some relief for policymakers. In Japan, the Nikkei 225 rose 1.12% to 40,074.69, while the broad-based Topix gained 1.15% to 2,856.62. South Korea’s Kospi fell 0.84% to 2,780.86 and Australia’s ASX 200 slipped 0.42% to 7,718.20. In mainland, the Shanghai Composite Index inched higher by 0.08% to 2,997.01, while Hong Kong’s Hang Seng index gained 0.29% to 17,769.14.

Wall Street Turn Higher After Jerome Powell Comments

Wall Street’s main indexes rose overnight as traders digested fresh commentary from Federal Reserve chair Jerome Powell, who cheered the "disinflationary path" of recent economic data. The Dow Jones Industrial Average gained 0.41% to close at 39,331.85. The S&P 500 rose 0.62% to finish the session at 5,509.01, and the Nasdaq Composite gained 0.84% to 18,028.76. Powell said he is encouraged by cooler inflation but reinforced that the central bank will need to see more evidence before cutting interest rates. He noted the latest inflation readings from April and May "do suggest that we are getting back on a disinflationary path." Comments by the Fed's top official outweighed data showing U.S. job openings increased in May after posting outsized declines in the prior two months.

Job openings, a measure of labour demand, rose 221,000 to 8.140 million on the last day of May, according to the Job Openings and Labor Turnover Survey. On the political front, the U.S. Supreme Court's ruling that former President Donald Trump is entitled to immunity from federal prosecution for official actions he took while in office, has stoked speculation about the possibility of another Trump presidency. Tesla shares supported the S&P 500 as Elon Musk’s electric vehicle company reported better-than-expected deliveries for the second quarter.

Source: TA Research - 3 Jul 2024