Sideways Pending Fresh Local Catalyst

Bursa Malaysia’s blue chips rose on the first trading day of the second half, led by utility, energy and consumer heavyweights, as upbeat regional manufacturing data lifted market sentiment. The FBM KLCI climbed 8.11 points to close near session highs at 1,598.20, off an early low of 1,587.03, as gainers led losers 685 to 408 on total turnover of 3.66bn shares worth RM2.76bn.

Resistance at 1,622/1,632; Stronger Supports at 1,566/1,550

Sideways trading should persist in the near term, pending fresh local catalysts to lift the market from present consolidation. Immediate index resistance will be the early June high of 1,622, with the May high of 1,632 and 1,640 as tougher upside hurdles, while stronger supports are at 1,566, the 100-day moving average level, followed by 1,550.

Bargain MRCB & UEM Sunrise

MRCB is ripe for oversold rebound, with a climb above the 161.8%FP (65sen) to target the 176.4%FP (69sen) and 20/5/24 high (74sen) ahead, while the 200-day ma (55sen) will provide uptrend support. UEM Sunrise will need confirmed breakout above the 138.2%FP (RM1.21)

to fuel further upside momentum and aim for the 150%FP (RM1.30) and 161.8%FP (RM1.38) going forward, with downside cushioned by the 200-day ma (96sen).

Asian Markets Advance as Traders Digest Economic Data

Stocks in Asia rose on Monday as traders react to mostly upbeat manufacturing sector data from several markets in the region. China's Caixin/S&P Global manufacturing purchasing managers' index rose to 51.8 in June from 51.7 in May, a private survey showed on Monday, remaining above the break-even line of 50.0 that separates growth from contraction. It marked the fastest clip in more than three years and exceeded market forecasts of 51.2. In a sign the Asian region was benefiting from solid global demand, South Korea's factory activity growth quickened in June to the fastest in 26 months on surging new orders, a private survey showed on Monday. Separately, data also showed Japan's factory activity stayed unchanged in June amid lackluster demand and as companies struggled with rising costs due to the weak yen.

Traders focus this week will be on the minutes of the Fed's June meeting that will offer more clues on the central bank's thinking before the spotlight switches to payrolls data on Friday. The Fed in June projected just one rate cut in 2024. In Japan, the Nikkei 225 rose 0.12% to 39,631.06, while the broad-based Topix gained 0.46% to 2,822.59. South Korea’s Kospi gained 0.23% to 2,801.31 and the Shanghai Composite Index added 0.92% to 2,994.73. In Australia, the ASX 200 fell 0.22% to 7,750.70, while the Hong Kong markets are closed Monday for a public holiday.

Wall Street Edges Higher Ahead of Economic Data

Wall Street’s main indexes edged higher in choppy trading overnight as traders waited for U.S. labor market data due later this week that could provide clues on the likelihood of interest rate cut. The Dow Jones Industrial Average rose 0.13% to close at 39,169.52. The S&P 500 added 0.27% to finish the session at 5,475.09, and the Nasdaq Composite gained 0.83% to 17,879.30. Traders will be eyeing remarks from Fed Chair Jerome Powell on late Tuesday, followed by minutes from the Fed's latest policy meeting on Wednesday and U.S. non-farm payrolls data due on Friday. Gains were kept in check as Treasury yields soared. The benchmark 10-year yield climbed more than 14 basis points to 4.481%.

US political risks also started to emerge amid questions about whether President Joe Biden will step down as a candidate after a poor debate showing. On the U.S. economic front, the Institute for Supply Management released a report showing manufacturing activity in the U.S. unexpectedly contracted at a slightly faster rate in the month of June. A separate report released by the Commerce Department unexpectedly showed a slight decrease in U.S. construction spending in the month of May. Technology stocks Microsoft and Alphabet traded marginally higher, alongside artificial intelligence favorite Nvidia.

Source: TA Research - 2 Jul 2024