FBM KLCI

• As expected, the FBM KLCI continued its upward trajectory last week, buoyed by continuous support from foreign funds and improved market sentiments. The benchmark index added 0.5% last week to 1,619.06, with construction, technology, and property leading the gains, up by 4.8%, 1.8% and 1.5%, respectively. The MYR also hit a high of 4.667 against the US dollar on last Friday, its highest level since 16 January.

• Moving forward, market confidence of a September US rate cut has reignited optimism. This week's market sentiment will be influenced by earnings reports from key global tech companies like ASML and TSM, which could impact local data center investment enthusiasm. Additionally, attention will be on Malaysia's 2Q advanced GDP estimate, set for release on Friday, which could further sway market sentiment.

• Technically, the benchmark index has held firmly above its key 5-week SMA and the immediate resistance-turned-support level of 1,615, signalling a potential continuation of the bullish trend. Weekly stochastic and RSI indicators are trending upwards, and the improved SmartMCDX index further reinforces near-term strength.

• In short, we expect the market to retain its upward trajectory this week, supported by continuous foreign fund inflows. However, investors should closely watch the earnings and outlooks of US tech companies and the financial performance of local data center beneficiaries, which have driven the recent rally. Key resistance levels are at 1,628, followed by the recent high of 1,632. Key support levels are at 1,615 and the psychological 1,600.

Source: Kenanga Research - 15 Jul 2024