TA Sector Research

Daily Brief - 21 May 2024

Publish date: Tue, 21 May 2024, 11:04 AM

Foreign Buying to Sustain Uptrend

Strong foreign buying interest in key construction, telco, technology and oil & gas heavyweights on Monday lifted the local blue-chip benchmark to settle at another fresh high in more than three years. The FBM KLCI climbed 10.88 points to close at 1,627.50, off an opening low of 1,618.28 and high of 1,629.81, as gainers led losers 840 to 460 on total turnover of 6.98bn shares worth RM4.37bn.

Resistance at 1,640/1,660; Supports at 1,600/1,583

Blue chips should extend uptrend on sustained foreign fund buying amid economic growth optimism following the strong 1QGDP numbers. Immediate index resistance is revised higher to 1,640, with 1,660 and then 1,680 as tougher upside hurdles ahead. Immediate uptrend support is at 1,600, with 1,583, 1,568 and 1,540, the respective rising 30-day, 50-day and 100- day moving averages, acting as strong supports.

Bargain Axiata & CelcomDigi

Axiata need to overcome the 76.4%FR (RM3.02) to enhance uptrend momentum and challenge the 30/11/22 peak (RM3.28), with next hurdle seen at the 123.6%FP (RM3.54), while the 100-day ma (RM2.68) and 200-day ma (RM2.57) limit downside. CelcomDigi will need breakout confirmation above the 76.4%FR (RM4.26) to extend recovery towards the 30/5/23 high (RM4.60), with next key hurdle at the 123.6%FP (RM4.93), while downside should be capped by the lower Bollinger band (RM4.03) and 50%FR (RM3.89).

Asian Markets Gain Ahead of Key Economic Data

Asian markets finished higher on Monday as traders awaited a slew of economic data this week for insight into the direction of central bank policy. This week, traders await trade, inflation and business activity data out from Japan later this week, while Singapore will release its April inflation data and final figures for its first-quarter gross domestic product. Traders will be also looking to economic activity readings in Europe as well as inflation prints in the UK and Canada. Meanwhile, a chorus of Fed officials are due to speak this week, including Governor Christopher Waller who is set to talk specifically about the US economy and monetary policy.

On economic news, China held its one- and five-year loan prime rates unchanged at 3.45% and 3.95%, respectively, after the country laid out measures on Friday to boost its property market. Traders will be looking to China following Beijing’s attempt to rescue the nation’s beleaguered property market, even as concerns linger that the measures may be too small. Japan’s Nikkei 225 climbed 0.73% to 39,069.38, while South Korea’s Kospi gained 0.64% to 2,742.14. In Australia, the S&P/ASX 200 index rose 0.63% to 7,863.70 and the Shanghai Composite Index 0.54% to 3,171.15.

Wall Street End Mixed as Traders Debate Fed Rate Path

Stocks ended mixed on Wall Street overnight as traders weighed hawkish statements from the Federal Reserve against evidence of cooling U.S. inflation. The Dow Jones Industrial Average fell 0.49% to close at 39,806.77. The S&P inched up 0.09% to 5,308.13, while the Nasdaq Composite gained 65% to 16,794.87. Comments from Fed officials have reflected the U.S. central bank's cautious view of its progress in reining in inflation and the timing of interest rate cuts. Fed Vice Chair Philip Jefferson said it was too early to tell if inflation slowdown is "long lasting," while Atlanta Fed President Raphael Bostic said it will "take a while" for the central back to be confident that price growth is on a sustainable downward path. Overall trading also remained somewhat subdued, as traders seemed reluctant to make more significant bets amid a lack of major U.S. economic data on the day.

The economic calendar remains relatively quiet throughout the week, although reports on durable goods orders and new and existing home sales may attract some attention along with the minutes of the latest Fed meeting. A steep drop by shares of JPMorgan Chase weighed on the Dow, after CEO Jamie Dimon signaled his retirement may be closer than previously anticipated by Wall Street. The advance by the Nasdaq reflected strength in the tech sector, with semiconductor stocks turning in a particularly strong performance on the day. Nvidia shares gained more than 2% on multiple bullish analysts calls that highlighted the company’s preeminent market position.

Source: TA Research - 21 May 2024

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