FBM KLCI

• As expected, the FBM KLCI reversed its previous downtrend, closing 20.93 points (1.3%) higher at 1,611.02 last Friday, driven by firm foreign inflows and improving regional performance. Weekly turnover increased to 23.8b units valued at RM17.5b, compared to 23.5b units valued at RM16.9b in the previous week. All sector indices improved on a weekly basis, with construction, utilities, and property sectors leading the gains, up by 7.9%, 6.0%, and 2.6%, respectively.

• Looking ahead, investors will be closely watching Thursday’s BNM interest rate decision, US inflation data (CPI and PPI), and the start of the 2Q US corporate earnings season on Friday. Additionally, the outcomes of the recent general elections in France and the UK, Europe’s two largest economies, are expected to provide some clarity on regional financial market direction.

• Technically, the weekly chart of the index has formed a morning star candlestick, indicating the potential of the start of an upward climb. The weekly stochastic and RSI indicators have fallen below their overbought territory, suggesting room for further upward movement. Additionally, the close above its 5-week SMA on last Friday also further reinforces its near-term strength.

• In short, we expect the market to retain its upward trajectory this week, buoyed by continuous support from foreign funds and improved market sentiments. Key resistance levels are at 1,615, followed by the recent high of 1,632. Key support levels are identified at the psychological 1,600, followed by the pivotal 1,597, coinciding with its 5-week SMA.

Source: Kenanga Research - 9 Jul 2024