Blue Chips Range Bound as Lower Liners Shine

While blue chips stayed in profit-taking consolidation on Monday, active rotational plays on lower liner transport, utility, construction and property stocks highlight trading. The FBM KLCI slipped 3.49 points to close at 1,614.37, off an opening high of 1,619.24 and low of 1,613.01, as gainers led losers 628 to 531 on total turnover of 5.96bn shares worth RM3.3bn.

Resistance at 1,632/1,640; Supports at 1,600/1,586

Blue chips should trade sideways as investors await the keenly watched US FOMC meeting mid-week, while rotational plays on lower liner construction and property stocks highlight. Immediate index resistance will be from the recent high of 1,632, with 1,640, 1,660 and then 1,680 as tougher upside hurdles. Immediate supports are at 1,600, the rising 30-day moving average, with 1,586 and 1,556, the respective 50-day and 100-day moving averages, acting as stronger supports.

Bargain Ekovest & IW City

Ekovest need to sustain above the 200-day ma (49sen) to enhance upside momentum towards the 61.8%FR (52sen) and 76.4%FR (56sen) ahead, while the 23.6%FR (41sen) provides key retracement support to cushion downside. IWCity will need convincing breakout above the 61.8%FR (82sen) to reenergize upside momentum and aim for the 76.4%FR (90sen) and 8/1/24 peak (RM1.03), with downside risk cushioned by the 200-day ma (72sen) and 38.2%FR (69sen).

Asia Mixed Ahead of US Fed and BoJ Rate Decision

Asian markets ended mixed on Monday after a stronger-than-expected U.S. jobs report on Friday showed hiring and wage growth picked up in May. This adds to the narrative the Fed doesn’t have to rush to lower interest rates. Traders don’t expect the Federal Open Market Committee to cut rates at its meeting this week or the next meeting in July. This week in Asia, investors will assess Japan’s revised first-quarter gross domestic product numbers on Monday, which came in at an annualized contraction of 1.8%. This was softer than the 2% contraction initially reported and also lower than the 1.9% revised contraction expected in a Reuters poll of economists. Separately, the Bank of Japan’s rate decision will come on Friday, while China and India’s inflation numbers for May will be released on Wednesday.

Japan’s Nikkei 225 climbed 0.92% to close at 39,038.16, while the broad-based Topix gained 1% to 2,782.49 after the GDP announcement. In contrast, the South Korean Kospi closed down 0.79% at 2,701.17 and the small cap Kosdaq slipped 0.17%, snapping a five-day winning streak and ending at 864.71. A few Asian markets are closed for a holiday, including Australia, mainland China, Hong Kong and Taiwan.

Wall Street Drift Higher Ahead of Fed Rate Decision

Wall Street’s main indexes eked out gains in a cautious session overnight as traders await the Federal Reserve's policy meeting and new inflation data due later this week. The Dow Jones Industrial Average climbed 0.18% to 38,868.04. The S&P 500 advanced by 0.26%, closing at 5,360.79, while the Nasdaq Composite gained 0.35% to end at 17,192.53. The Fed is due to announce its latest monetary policy decision on late Wednesday and is expected to hold interest rates steady. Traders will parse through the Fed’s updated projections on the timing and frequency of rate cuts. Markets are now pricing in just one rate cut this year, coming in November, according to the CME Fed Watch Tool.

Ahead of the Fed announcement, the Labor Department is scheduled to release its report on consumer price inflation in the month of May. Providing some support to the Nasdaq and S&P 500, Nvidia shares ended up 0.7%, the session after a 10-for-one stock split. Some investors now believe the chip maker might be included in the blue-chip Dow. Meta Platforms also jumped nearly 2%, pushing the S&P 500 tech sector about 0.3% higher. Only three of the S&P 500’s 11 sectors were down in late-afternoon trading, including financials, consumer staples and materials.

Source: TA Research - 11 Jun 2024