Uptrend gains momentum amid Fed’s cut optimism and positive technical readings

KLCI: 1615.4 (18.7)
DOW: 38711.29 (140.3)
MSCI Asia: 178.75 (-1.5)
FCPO (RM): 3925 (4)
BRENT (USD): 77.52 (-0.84)
USDMYR: 4.7017 (-0.005)
SGDMYR: 3.4879 (0.006)
EURMYR: 5.1118 (0.006)
AUDMYR: 3.1217 (-0.005)
GBPMYR: 6.001 (0.012)
US: 10-yr yield (%) 4.3259 (-0.063)
BNM:10-yr yield (%) 3.857 (-0.014)

Asia/US. Asian markets ended lower as investors awaited more cues on interest rates this week from the US jobs data (7 June), BOC (5 June) and ECB (6 June) policy meetings’ decision, while the SENSEX slid 6.1% after Modi’s BJP lost its majority in Parliament. Dow rebounded 140 pts to 38,711 as a sluggish April’s job openings report (plunged to a 3Y low) and yesterday’s weak manufacturing data pointed to a weaker economic growth, fuelling bets for the Fed to cut rate this year. All eyes now are focusing on May payrolls report this week for clues about the Fed’s future policy path. 

Malaysia. After tumbling 32.5 pts in the last 6th straight sessions, KLCI rebounded 18.7 pts to 1,615.4, led by bargain hunting on PMETAL, CIMB, MAYBANK, SIMEPLT, MISC and PBBANK. Market breadth turned positive at 1.22 after 6th consecutive session of negative readings. Foreigners returned major net buyers after disposing RM1.32bn shares six day in a row (+RM253m, May: +RM1.48bn, YTD: -RM513m) while local institutions (-RM221m, May: -RM654m, YTD: +RM3.68bn) and retailers (-RM32m, May: -RM830m, YTD: -RM3.17bn) emerged as major net sellers. 

Outlook Technically, KLCI is poised to revisit YTD high of 1,632 in the short term, buoyed by (i) encouraging 1Q24 results and positive technical readings, (ii) rising bets for global policy easing, (iii) a less volatile RM, (iv) policy tailwinds amid clearer policy frameworks in attracting higher value-added FDIs along with trends such as China + 1, and (v) political stability to expediate economic and fiscal reforms to foster long-term growth and competitiveness. Nevertheless, we expect formidable resistance near 1,650-1,675 zones after rallying 79.3 pts or 5.2% in 2QTD and 160.7 pts or 11.1% YTD.