Profit-Taking Breather on Situational Plays

Stocks extended profit-taking for third day on Wednesday, but the technology sector (+2.1%) outperformed on optimism over recent data centre deals. The FBM KLCI lost another 2.54 points to end at the day’s low of 1,608.95, off an early high of 1,618.99, as losers beat gainers 758 to 550 on higher trading volume totalling 7.59bn shares worth RM5.28bn.

Supports at 1,602/1,588; Resistance at 1,632/1,640

Blue chips should stay range bound as investors assess regional inflation data and the US FOMC statement on interest rates, while situational plays on lower liners takes profit-taking breather. Immediate index supports are at 1,602, the rising 30-day moving average, with 1,588 and 1,558, the respective 50-day and 100-day moving averages, acting as stronger supports. Immediate resistance remains the recent high of 1,632, with 1,640, 1,660 and then 1,680 as tougher upside hurdles.

Bargain Aemulus & UEM Sunrise

Aemulus will need breakout from consolidation to challenge the 38.2%FR (42sen), with a successful breakout to aim for the 50%FR (47sen) and 61.8%FR (53sen) going forward, while supports from the 100-day ma (34sen) and 200-day ma (32sen) cushion downside. UEM Sunrise need confirmed breakout above the 150%FP (RM1.30) to target the 161.8%FP (RM1.38) and 176.4%FP (RM1.48) ahead, with uptrend supports seen at the 50-day ma (RM1.13) and 100-day ma (RM1.08).

Asian Markets Subdued as Traders Digest Economic Data

Asian markets were largely subdued in mixed trade Wednesday, as traders assessed inflation data from the region ahead of the Federal Reserve policy decision that would set the nearterm course for interest rates. Data showed that China's consumer price index fell 0.1% in May from a month earlier, missing forecasts. On an annual basis, they rose 0.3%. Separately, Japan’s corporate goods inflation rate accelerated to 2.4% in May, beating expectations and marking its fastest rate of increase since August. Traders in Asia will also look toward the U.S. Federal Reserve’s decision on late Wednesday stateside, which will come hours after the country’s May inflation report.

While the Fed is widely expected to leave interest rates unchanged, traders are likely to pay close attention to the accompanying statement for cues on the outlook for interest rates. Australia’s ASX 200 fell 0.51% to 7,715.50, and South Korea’s Kospi gained 0.84% to 2,728.17. In Japan, the Nikkei 225 fell 0.66% to 38,876.71, while the broad-based Topix lost 0.73% to 2,756.44. In Hong Kong, the Hang Seng index dropped 1.31% to 17,937.84, and the Shanghai Composite Index gained 0.31% to 3,037.47.

S&P 500, Nasdaq Post Record Highs as Inflation Cools

The S&P 500 and the Nasdaq popped to fresh records overnight as traders weighed a marketpleasing inflation report against lowered interest rate cut expectations. The Dow Jones Industrial Average fell 0.09% to close at 38,712.21. The S&P 500 climbed 0.85% to finish the session at 5,421.03, and the Nasdaq Composite jumped 1.53% to 17,608.44. Data released ahead of the Federal Reserve’s policy decision showed inflation cooling in May. The consumerprice index rose 3.3% from a year ago, down slightly from April’s reading and lower than the 3.4% economists expected. However, while announcing its widely expected decision to leave interest rates unchanged, the Fed also revealed officials now expect only one interest rate cut this year.

The cooler-than-expected CPI data spurred a decline in Treasury yields, with the rate on the 10-year note falling as low as 4.25%, its lowest level since April 1. Gains in the S&P 500 were led by the index’s information technology sector. Apple shares climbed 2.9%, while Oracle shares jumped 13% after company announced new AI deals with Microsoft. Building products stocks also rallied, with investors betting that lower borrowing costs will lead to more home construction and sales.

Source: TA Research - 13 Jun 2024