Range Bound Ahead of Key US Employment Report

Blue chips regained strength Thursday on late buying interest in consumer and banking heavyweights, while the broader market extended profit-taking consolidation after recent gains. The FBM KLCI rose 4.33 points to close at 1,580.30, off an opening low of 1,574.27 and high of 1,582.68, but losers edged gainers 620 to 530 on reduced turnover of 3.81bn shares worth RM3.05bn.

Resistance at 1,600/1,620; Supports at 1,555/1,545

Stocks should extend range bound trade ahead of the weekend, as investors await the closely watched US employment report for April for leads on the economic health of the US economy. Immediate resistance for the index remains at 1,600, with stronger upside hurdles seen at 1,620 and then 1,640. Key supports will be at 1,555, 1,545 and 1,522, the respective rising 30-day, 50-day and 100-day moving averages.

Bargain Gadang & WCT Holdings

Gadang will need sustained strength above the 76.4%FR (41sen) to enhance upside potential for retest of the 15/4/22 high (45sen), with a confirmed breakout to aim for the 123.6%FP (49sen) ahead, while key supports are from the 100-day ma (38sen) and 200-day ma (35sen). WCT Holdings need breakout confirmation above the upper Bollinger band (55sen) to target the 61.8%FR (57sen) and 76.4%FR (62sen) going forward, with downside risk seen capped by the 38.2%FR (48sen).

Asian Markets Mixed as Traders Digest Fed Chair’s Comment

Asian markets traded mixed on Thursday as traders digested commentary from Federal Reserve Chair Jerome Powell after the central bank held interest rates steady at its latest policy meeting. The Fed announced its widely expected decision to leave interest rates unchanged, citing a lack of further progress toward its 2% inflation objective in recent months. Members of the Fed also reiterated that they need greater confidence that inflation is moving sustainably toward 2% before they consider cutting interest rates. The Fed's next monetary policy meeting is scheduled for June 11-12, with the central bank likely to leave rates unchanged once again.

On the economic front, South Korea’s consumer prices rose at a slower pace in April from March on a year-on-year basis, according to official data. April CPI came in at 2.9% year on year, compared with a 3.1% rise in March. Japan’s Nikkei 225 closed 0.10% lower at 38,236.07, while the broader Topix ended flat at 2,728.53. South Korea’s Kospi slipped 0.31% to 2,683.65, while the small cap Kosdaq fell 0.17% to 867.48. In Australia, the S&P/ASX 200 rose 0.23% to close at 7,587.00, and Hong Kong’s Hang Seng index jumped 2.5% to 18,027.13. Mainland China market remained closed for the Labor Day holiday.

Wall Street Stocks Finished Higher Ahead of Jobs Data

Wall Street’s main indexes strode higher overnight as traders set aside rate worries for now ahead of the April employment data. The Dow Jones Industrial Average added 0.85% to close at 38,225.66. The S&P 500 gained 0.91% to settle at 5,064.20, while the Nasdaq Composite surged 1.51% to end at 15,840.96. The strength that emerged on Wall Street came as traders seemed to breathe a sigh of relief following the Federal Reserve's monetary policy announcement on Wednesday. This week, the Federal Reserve acknowledged a recent setback in its inflation fight but indicated it was still more likely to lower interest rates than raise them again. That has helped support the appetite for riskier investments, such as stocks over government bonds, which are viewed as safer to hold in periods of uncertainty.

On economic news, data released overnight included muted jobless claims, a drop in planned layoffs, a surge in quarterly labour costs and a sharp deceleration in productivity, all of which throws focus on Friday's closely watched April employment report. Meanwhile, first-quarter earnings season has rounded the corner, with 373 of the companies in the S&P 500 having reported. Of those, 77% have posted better-than-expected results, according to LSEG data. Mega-cap technology stocks rose as Treasury yields dipped, with Nvidia and Amazon jumping more than 3% each.

Source: TA Research - 3 May 2024