Improving Momentum Key to Sustain Oversold Rebound

The local market staged rebound on Wednesday, as bargain hunters returned after stocks had drifted lower for the seventh straight trading session. The FBM KLCI rose 5.57 points to close at 1,590.95, after moving between early low of 1,581.76 and high of 1,593.42, as gainers led losers 674 to 433 on lower turnover of 4.73bn shares worth RM3.22bn.

Stronger Supports at 1,565/1,550; Resistance at 1,622/1,632

Stocks should sustain rebound with technical momentum being oversold after falling for seven straight sessions, and improved buying momentum key to extend recovery. Stronger index supports are at 1,565, the 100-day moving average level, and 1,550, while immediate resistance is at the early June high of 1,622, with the May high of 1,632 and 1,640 as tougher upside hurdles.

Bargain Hiap Teck & Unisem

Hiap Teck shares will need breakout confirmation above the 50%FR (45sen) to strengthen upward momentum and target the 61.8%FR (51sen) and 76.4%FR (58sen) ahead, while downside is cushioned by the 38.2%FR (39sen), matching the 100-day ma. Unisem need to overcome the 123.6%FP (RM4.30) to extend uptrend and aim for the 138.2%FR (RM4.54) and 150%FP (RM4.73) going forward, while uptrend support from the 50-day ma (RM3.94) cushions downside.

Asian Markets Rose as Tech Stocks Rebound With Nvidia

Asian markets rose Wednesday as semiconductor related stocks jumped after Nvidia rallied overnight, and Australia’s inflation rate climbed for a third straight month. Australia’s headline inflation for May came in at 4%, compared with the 3.6% recorded in April. The core inflation rate also came in at 4%, higher than the 3.8% expected by a Reuters poll of economists. The higher-than-expected inflation reading could spur the RBA to raise interest rates.

Separately, Singapore’s factory output climbed 2.9% in May, beating expectations from a Reuters poll of economists, which predicted a 2% year-on-year growth rate. Australia’s S&P/ASX 200 lost 0.71%, dragged by retail trade stocks, closing at 7,783. Japan’s Nikkei 225 gained 1.26% and ended at 39,667.07, hitting its highest level since April 9, while South Korea’s Kospi gained 0.64% to 2,792.05. Hong Kong’s Hang Seng index was marginally up, while mainland China’s CSI 300 closed 0.65% higher at 3,480.26 – rebounding off a near four-month low.

Wall Street Inches Higher Ahead of Key Economic Data

Wall Street’s main indexes edged higher in choppy trading overnight as traders remain cautious ahead of key economic data this week. The Dow Jones Industrial Average inched higher by 0.04% to 39,127.80. The S&P 500 added 0.16% to 5,477.90, while the Nasdaq Composite gained 0.49% to close at 17,805.16. The market is looking to economic prints for cues ahead of the key PCE inflation release on Friday. The Federal Reserve keeps a close eye on this gauge, and traders are hopeful that the central bank will lower interest rates at some point later this year if price increases continue to moderate.

On the economic front, a report released by the Commerce Department showed new home sales in the U.S. saw a substantial decrease in the month of May. Meanwhile, building permits in the U.S. fell by 2.8% to a seasonally adjusted annual rate of 1.399 million in May. Amazon rose 7.6 points, or 4.1%, making it the Dow’s top performer and on its way to becoming the fifth US company ever with a USD2 trillion-plus value. Rivian Automotive soared 21% after Volkswagen Group said it would invest up to USD5 billion in the electric vehicle company.

Source: TA Research - 27 Jun 2024