MARKET REVIEW

Global. Asian stocks ended moderately higher as sentiment was boosted by a strong April US ISM manufacturing data and an upbeat Australia GDP report, ahead of the widely focused US jobs data this Friday that could engender further talk of Fed’s policy normalisation. The Dow jumped as much as 130 pts to 34706 in early trades, led by energy shares as oil rallied to more than two-year high on OPEC+ supply discipline and promising demand prospects. However, the index ended only +25 pts at 34600 as investors assessed the Fed's Beige Book, which highlighted the ongoing labour supply shortage and faster pace of inflation are set to continue in the months ahead.

Malaysia. Led by 27 gains in KLCI components, KLCI soared 12 pts to 1597.9 as market sentiment was boosted by surging oil prices and FCPO, coupled with the government’s pledge to further ramp up in daily vaccination rates next month. Market breadth was bullish as 710 gainers beat 362 losers with a total of 7.4bn shares transacted valued at RM4.1bn. Foreign institutions returned as net buyers (+RM139m; 5D: +RM372m) whilst retailers (- RM18m; 5D: +RM298m) joined local institutions (-RM121m; 5D: -RM670m) as the major net sellers.

TECHNICAL OUTLOOK: KLCI

Following the FMCO announcement last weekend, KLCI fell to a low of 1568 on Monday before rebounding to finish at 1597 yesterday. We are now turning cautiously optimistic on the index to gain further grounds after staging a commendable close above multiple key SMAs. A successful breakout above the 1606 (LT downtrend line from 1696) levels would spur the index towards 1623-1646 levels. Conversely, failure to clear the hurdle will witness an extended consolidation with key supports at 1582-1577-1552 zones.

MARKET OUTLOOK

After plunging to 1552 (YTD low), KLCI has staged a commendable rebound to end at 1597.6 yesterday as the tussle between slowing economy and elevated Covid-19 infections against further acceleration in vaccination rollouts, abundant liquidity and prevailing low interest rates (BNM may cut OPR by another 25bps on 8 July should the lockdown prolong beyond a month) continue to play out in the market. Key resistances are pegged at 1600- 1606-1623 levels whilst supports are situated near 1582-1577-1552 territory.

Source: Hong Leong Investment Bank Research - 3 Jun 2021