MARKET REVIEW Global. The MSCI All Countries Asia Pacific Index rose 0.6% at 169.1, taking cues from easing Covid-19 curbs in China and narrower contraction in the May PMI services print (47.8, April: 41.9), overshadowed an upbeat US May job reports (390k, consensus: 325k) that could bolster the Fed’s aggressive stance against red-hot inflation. The Dow jumped as much as 335 pts in early trades, supported by the reopening efforts in China. However, the index trimmed gains to +16 pts at 32,916 while the US 10Y bond yield rallied 0.11% to 3.04% as Wall St awaits Friday’s release of the CPI, which could impact the pace of the Fed’s monetary policy tightening cycle (FOMC meeting: 14-15 June) following a robust May jobs data last Friday.

Malaysia. Ahead of the extended weekend holiday and a resumption of foreign net outflows, KLCI slid 12.1 pts at 1,537.8 to register a 3rd day of decline amid selloff in banking and telco stocks. Despite the headline loss, market breadth (gainers/losers) was positive at 1.35 from 0.88 previously. Local institutions (+RM13m, YTD: -RM8.36bn) emerged as net buyers for a 2nd session whilst foreign institutions (-RM9m, YTD: +RM7.4bn) and retailers (- RM4m, YTD: +RM964m) emerged as the net sellers in equities.

TECHNICAL OUTLOOK: KLCI

KLCI tumbled 12.1 pts at 1,537.8 for a 3rd consecutive decline, ending -8.9 pts WoW. Following the breakdown below the 200D MA (near 1,554) and weakening technicals, the benchmark may continue to drift lower towards 1,520-1,530 territory before staging a technical rebound. On the upside, key resistances are situated at 1,554, 1,565 (50% FR) and 1,576 (50D MA).

MARKET OUTLOOK

Despite positive reopening leads from Shanghai after more than two months of lockdown, Bursa Malaysia is likely to stay in a cautious mode ahead of the key US May CPI data this Friday, the protracted Russia-Ukraine war and whether inflation can be brought under control by central banks without generating a recession amid a transition from quantitative easing to quantitative tightening. Weekly supports are pegged at 1,520 -1,530 whilst resistances are situated near 1,554-1,565-1,576 zones.

Source: Hong Leong Investment Bank Research - 7 Jun 2022