Uptrend is still intact with stiff resistance at 1,632-1,650 zones

KLCI: 1608.53 (-6.9)
DOW: 38807.33 (96)
MSCI Asia: 178.54 (-0.2)
FCPO (RM): 3893 (-13)
BRENT (USD): 78.41 (0.89)
USDMYR: 4.6978 (-0.004)
SGDMYR: 3.4864 (-0.001)
EURMYR: 5.1081 (-0.004)
AUDMYR: 3.1228 (0.001)
GBPMYR: 6.0021 (0.001)
US: 10-yr yield (%) 4.2755 (-0.05)
BNM:10-yr yield (%) 3.864 (0.007)

Asia/US. Asian markets ended mixed as investors digested India’s election outcome after Modi formed the new government for the 3rd term alongside the BJD-led coalition after failing to secure an outright win. Sentiment remained cautious pending further clarity on interest rates path from the BOC (cut rates by 0.25% to 4.75% on 5 June) and ECB (6 June) policy meetings’ decision, and the US jobs data (7 June). Dow jumped 96 pts to 38,807 while the S&P 500 (+1.1% to 5,354) and Nasdaq (+1.95% to 17,186), driven by a tech rally led by NVDA amid optimism that the Fed might lower rates later this year after a poor private ADP data. All eyes now are focusing on May payrolls report on 7 June for clues about the Fed’s future policy path. 

Malaysia. KLCI lost 6.9 pts at 1,608.5 on profit taking after rallying 18.7 pts in the previous session, dragged by CIMB, MAYBANK, NESTLE, AXIATA, and MISC. Despite the headline loss, market breadth was positive at 1.23 vs 1.22 a day ago. Foreigners continued its selling moderately (-RM68m, June: +RM185m, YTD: -RM581m) alongside with local retailers (-RM2m, June: -RM34m, YTD: -RM3.17bn) while local institutions (+RM70m, June: -RM151m, YTD: +RM3.75bn) emerged as major net buyers.

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 72.5 pts (+4.7%) in 2QTD and 154 pts (+10.6%) YTD, in conjunction with the traditional lull period in June for KLCI (avg 10Y/20Y: -1.2%/-0.3%).