Copy Regional Strength on Rate Cut Hopes

Blue chips rose on Wednesday, mirroring regional gains as stronger economic data and optimism for rate cuts after the US Federal Reserve Chairman signalled easing inflation boosted market sentiment. The FBM KLCI climbed 17.36 points, or 1.1% to end at the day’s high of 1,615.32, off an opening low of 1,599.60, as gainers swarmed losers 902 to 326 on total turnover of 5.47bn shares worth RM3.99bn.

Resistance at 1,622/1,632; Stronger Supports at 1,568/1,550

The local market should copy regional strength as improving economic data and increased hopes for interest rate cuts with the US Fed chief cueing slowing inflation ahead lift sentiment. Immediate index resistance remains at 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 1,568, the 100-day moving average level, followed by 1,550.

Bargain Bumi Armada & Dialog

Bumi Armada shares will need convincing breakout above the 76.4%FR (63sen) to boost upside momentum and target the 7/3/23 high (73sen), with next major hurdle at the 123.6%FP (83sen), while the 50%FR (52sen) cushions downside. Dialog need to break above the upper Bollinger band (RM2.59) to enhance upside potential and aim for the 25/1/23 high (RM2.73), with next upside hurdle at the 123.6%FP (RM2.97), and uptrend support from the rising 100- day ma (RM2.30).

Asian Markets Advance on Powell’s Dovish Tone

Asian markets rose Wednesday as traders weighed prospects for Federal Reserve interestrate cuts after Jerome Powell cited signals that the US is back on a disinflationary path. Fed Chair Jerome Powell expressed satisfaction with the progress on inflation but said he wants to see more before being confident enough to start cutting interest rates. Minutes of the Fed's last meeting is due later in the day and will offer more clues to its thinking on rates outlook. Traders looked ahead to the release of the Labor Department's closely watched monthly jobs report on Friday. In economic news, Japanese service activity contracted for the first time in nearly two years in June as domestic demand cooled.

Separately, the Caixin services purchasing managers’ index showed that China’s services sector expanded for the 18th consecutive month, though it was at its slowest pace since October 2023. In Japan, the Nikkei 225 jumped 1.26% to 40,580.76, while the broad-based Topix gained added 0.54% to 2,872.18. South Korea’s Kospi rose 0.47% to 2,794.01 and Australia’s ASX 200 gained 0.28% to 7,739.90. Hong Kong’s Hang Seng index also gained 1.18% to 17,978.57, while the Shanghai Composite Index bucked the regional trend and fell 0.49% to 2,982.38.

S&P 500, Nasdaq Finish Higher on Fed Rate-Cut Hopes

S&P 500 and Nasdaq ended holiday-shortened trading session on a high note overnight after a string of weaker-than-estimated economic reports reinforced the case for the Federal Reserve to start cutting rates this year. The Dow Jones Industrial Average inched down by 0.06% to end at 39,308.00. The S&P 500 rose 0.51% to 5,537.02, while the Nasdaq Composite gained 0.88% to finish the session at 18,188.30. The gains came after fresh labor-market data reaffirmed investors’ belief that the Federal Reserve can begin cutting interest rates during its September meeting. Both the ADP Employment report and weekly jobless claims data pointed to easing labour market conditions ahead of Friday's closely watched non-farm payrolls report. Markets hope signs of weakness in the labour market will encourage the Fed to cut interest rates.

However, overall trading activity remained somewhat subdued, as the markets closed earlier than usual and remain closed for the Independence Day holiday on Thursday. Investors also kept an eye on political developments, with Joe Biden struggling to contain pressures to abandon his reelection bid. Donald Trump led over Biden grew in post-debate polls from the Wall Street Journal and the New York Times. Tesla jumped 6.5%, trading near a six-month high after rising more than 10% on Tuesday following a smaller-than-expected drop in secondquarter vehicle deliveries.

Source: TA Research - 4 Jul 2024