Lower Pending Positive Local Catalyst

Blue chips fell on Wednesday with profit-taking on the healthcare, technology, telco and property sectors dragging the benchmark index to end below the 1,600 level. The FBM KLCI lost another 6.34 points to end at the day’s low of 1,599.79, off an early high of 1,609.22, as losers swarmed gainers 907 to 341 on lower turnover of 5.57bn shares worth RM4.06bn.

Better Supports at 1,591/1,562; Resistance at 1,632/1,640

Stocks should continue trading sideways to lower, pending positive local catalysts to lift the market from the current profit-taking drift-down. Immediate index supports are revised lower to 1,591 and 1,562, the respective 50-day and 100-day moving averages, while immediate resistance remains the recent high of 1,632, with 1,640, 1,660 and then 1,680 as tougher upside hurdles.

Bargain Axiata & CelcomDigi

Further weakness on Axiata should attract bargain hunters looking for rebound upside towards the 61.8%FR (RM2.85), with the 76.4%FR (RM3.02) and 30/11/22 high (RM3.28) as tougher upside hurdles, while the 200-day ma (RM2.59) cushions downside. CelcomDigi looks attractive to bargain at current levels for rebound upside towards the 50%FR (RM3.89), with next resistance at the 61.8%FR (RM4.06) and 76.4%FR (RM4.26), and key retracement support seen at the 23.6%FR (RM3.52).

Most Asian Markets Rose on Rate Optimism

Most Asian markets rose on Wednesday after soft U.S. retail sales data reinforced expectations of the Federal Reserve cutting rates later this year. Data on Tuesday showed U.S. retail sales barely rose in May and data for the prior month was revised considerably lower, suggesting economic activity remained lacklustre in the second quarter. The data led to a small boost in rate cut expectations for September. Hong Kong's Hang Seng index led gains in Asia as sentiment was boosted by the announcement of financial market reforms at the Lujiazui financial forum, which got under way in Shanghai on Wednesday.

The tech stocks in the region rallied to new highs after artificial intelligence chip firm Nvidia overtook Microsoft to become the world’s most valuable public company. Hong Kong’s Hang Seng index jumped 2.87% to 18,430.39, while South Korea’s Kospi gained 1.21% to 2,797.33. In Japan, the Nikkei 225 rose 0.23% to 38,570.76, while the broad-based Topix added 0.47% to 2,728.64. In Australia, the ASX 200 fell 0.11% to 7,769.70 and the Shanghai Composite Index slipped 0.40% to 3,018.05.

European Markets Slightly Lower; FTSE Up After UK Inflation Hit Target

European stocks closed lower overnight, losing the positive momentum seen during the previous trading day, as US financial markets are closed for the Juneteenth holiday. The Stoxx 600 index ended the session down 0.18%, with major bourses and sectors diverging. Tech stocks led losses, down 1.15%, while mining stocks added 0.65%. The UK’s FTSE 100 ticked up in afternoon trade, rising 0.2% and recovering from earlier losses after the country’s inflation print came in in line with expectations. Inflation rose by an annual 2.0% in May, hitting the Bank of England’s target ahead of its policy rate decision on Thursday. The Bank is widely expected to hold rates steady at 5.25%, with majority of economists polled by Reuters forecasting a cut in August.

As for stock moves, Games Workshop added 9% after the British firm forecast higher pretax profit of £200 million (USD254.4 million) in a full-year trading update. Data from the euro zone on Tuesday showed inflation in the single-currency euro area rose at an annual rate of 2.6% in May, up from 2.4% in April, the EU’s statistical office Eurostat confirmed in a final reading. Annual inflation within the wider EU was 2.7%, up from 2.6% the previous month.

Source: TA Research - 20 Jun 2024