Range Bound Pending Release of Key US Inflation Data

Blue chips registered moderate gains Tuesday, but the broader market was mixed as investors await inflation leads from key global economies. The FBM KLCI added 2.97 points to settle at 1,605.88, off an early low of 1,601.44 and high of 1,607.42, as gainers edged losers 600 to 516 on higher turnover of 4.69bn shares worth RM3.2bn.

Resistance at 1,620/1,640; Supports at 1,574/1,560

The local market should extend range bound trade pending release of key US inflation data later this week for firmer cues on the path for interest rates. Immediate resistance for the index stays at 1,620, with stronger upside hurdles seen at 1,640 and then 1,660. Immediate uptrend supports will be at 1,574, 1,560 and 1,534, which are the respective rising 30-day, 50- day and 100-day moving averages.

Bargain Ekovest & IWCity

Ekovest require sustained strength above the 200-day ma (49sen) to reinforce upside momentum and aim for the 61.8%FR (52sen) and 76.4%FR (56sen) ahead, with the lower Bollinger band (44sen) and 23.6%FR (41sen) to cushion downside. IWCity will need to climb above the 76.4%FR (90sen) to reignite bullish momentum and target the 8/1/24 peak (RM1.03) and 123.6%FP (RM1.16) going forward, while the 200-day ma (69sen) provides strong chart support.

Asian Markets Mixed as Investors Assess Inflation Data from India and Japan

Asian markets were mixed on Tuesday as investors assessed inflation numbers from India and Japan for leads on the global inflation situation. Data released Monday showed the consumer price index in India climbed 4.83% year on year, nearly in line with the 4.8% expected by economists polled by Reuters. India’s wholesale inflation reading is due to be released later in the day. Data from the Bank of Japan showed that corporate inflation was steady in April compared with a year earlier, but import prices jumped 6.4% year over year last month, most likely due to the yen’s sharp declines.

Japan’s Nikkei 225 and the broader Topix climbed 0.46% and 0.25%, respectively, ending at 38,356.06 and 2,730.95. South Korea’s Kospi rose 0.11% to 2,370.34, while the smaller-cap Kosdaq gained 0.9% to end at 862.15. The S&P/ASX 200 in Australia fell 0.3%, ending the day at 7,726.8. Hong Kong’s Hang Seng index reversed gains to trade 0.2% lower, while mainland China’s CSI 300 index fell 0.21% to close at 3,657.05.

Wall Street Rose Ahead of Consumer Inflation Report

US stocks rose overnight as April wholesale prices rose above estimates but the March reading was revised lower, while investors await the key consumer inflation report. The Nasdaq Composite gained 0.75% and notched a fresh closing record of 16,511.18. The Dow Jones Industrial Average added 126.60 points, or 0.32%, to end at 39,558.11, while the S&P 500 added 0.48%, closing at 5,246.68. The producer price index reading for April came in above estimates, putting a damper on expectations that the Federal Reserve would begin cutting rates later this year. The PPI gained 0.5% from the prior month, higher than the 0.3% that economists polled by Dow Jones had anticipated. The market’s initial reaction was negative, but moves were contained as the March wholesale prices reading was revised down to show a 0.1% decline.

That was enough to ease concerns about stubbornly high prices. Traders may also be hesitant to overreact to this report ahead of the more closely followed consumer price index, due to be released Wednesday. Traders also reacted to comments from Federal Reserve Chair Jerome Powell, who said on Tuesday that the U.S. central bank will need to practice patience in the face of higher-than-expected inflation. The Dow is coming off its first losing session in nine, snapping its longest winning streak since December. Stocks were pressured by a Monday report from the New York Federal Reserve that consumers’ expectations for inflation over the short and long term grew in April.

Source: TA Research - 15 May 2024