US Rate Cut Hopes to Encourage Foreign Buying

Bursa Malaysia shares rose on Monday, copying regional gains as a sharp slowdown in US jobs growth and services sector activity raised optimism for interest rate cuts by the end of this year. The FBM KLCI gained 7.8 points to close at 1,597.39, off an early low of 1,591.17 and high of 1,598.29, as gainers led losers 657 to 447 on robust trade totalling 4.48bn shares worth RM3.12bn.

Resistance at 1,600/1,620; Supports at 1,559/1,548

The local market should mirror performance in the region as hopes for US rate cuts towards the year-end improve investor sentiment and encourage foreign fund buying. 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 1,559, 1,548 and 1,525, the respective rising 30-day, 50-day and 100-day moving averages.

Bargain SKP Resources & VS Inds

SKP Resources will need breakout confirmation above the 50%FR (RM1.19) to enhance upward momentum towards the 38.2%FR (RM1.32) and 23.6%FR (RM1.47) ahead, while the 76.4%FR (91sen) provide strong retracement support. VS Inds need sustained strength above the 61.8%FR (96sen) to boost upside potential towards the 76.4%FR (RM1.02), with the next major hurdle seen from the 18/8/22 high (RM1.11), while the 200-day moving average (87sen) and 38.2%FR (86sen) will act to cushion downside.

Asian Markets Rose on Rate-Cut Optimism

Asian markets rose Monday on renewed bets that the Federal Reserve would most likely ease rates this year. Data showed a slowdown in U.S. employment growth in April and U.S. service sector activity unexpectedly contracted in April. The weak data raised hopes that the Fed will start reducing interest rates during the latter part of the current year. Fed Chair Jerome Powell already signalled to the market that rate hikes are off the table in almost any scenario. Traders will also be mindful of a swath of central bank meetings this week, led by a likely hawkish Reserve Bank of Australia on Tuesday following stronger-than-expected inflation data last month.

Meanwhile, a long-awaited recovery in the Chinese economy is also gaining momentum, with data on Monday showing the country's services activity expansion slowed amid rising costs, but growth in new orders accelerated, and business sentiment rose solidly. In Australia, the S&P/ASX 200 rose 0.60% to 7,674.70, while the Shanghai Composite index gained 1.16% to 3,140.72. In Hong Kong, the Hang Seng index rose 0.55% to 18,578.30, while Japan and South Korea's markets are closed for a public holiday.

Wall Street Climbs as Rate Cut Hopes Linger

Wall Street’s main indexes ended higher overnight as traders continued to gain hope that there was a greater chance of the Federal Reserve cutting interest rates this year. The Dow Jones Industrial Average climbed 0.46% to close at 38,852.27. The S&P 500 advanced 1.03% to end at 5,180.74, and the Nasdaq Composite gained 1.19% to reach 16,349.25. Relatively dovish comments from Federal Reserve Chair Jerome Powell combined with weaker-thanexpected job growth in April have largely eliminated short-lived concerns the Fed might actually consider raising rates. More than two-thirds of bets are now on a September rate cut from the Fed, according to the CME Fed-Watch Tool

Source: TA Research - 7 May 2024