Data Centre and Infrastructure Plays to Buoy Sentiment

The local blue-chip benchmark climbed to re-test the May high on Monday, with construction and property stocks leading gains, prior to profit-taking which forced it to close off highs. The FBM KLCI rose 10.76 points to close at 1,629.82, off an opening low of 1,619.19 and high of 1,632.69, as gainers led losers 738 to 491 on total turnover of 5.36bn shares worth RM3.95bn.

Resistance at 1,632/1,640; Supports at 1,606/1,598

Local market sentiment should stay buoyant, with gains focused on the construction, property and utility sectors amid optimism over data centre and infrastructure deals, and positive expectations for more US interest rate cuts as inflation eases. Immediate index resistance remains at the May high of 1,632, with 1,640 and 1,660 as tougher upside hurdles, while immediate supports are at 1,606, 1,598 and 1,574, the respective steadily rising 30-day, 50- day and 100-day moving average levels.

Bargain Genting Berhad & GENM

Genting Berhad will need sustained strength above the 76.4%FR (RM4.83) for upward extension to challenge the 11/3/24 high (RM5.10), with a confirmed breakout to aim for the 123.6%FP (RM5.38) ahead, while the 200-day ma (RM4.54) and 50%FR (RM4.52) cushions downside. GENM needs decisive breakout above the 61.8%FR (RM2.64) to boost upside momentum towards the 76.4%FR (RM2.72) and re-test the 27/2/4 high (RM2.84), while key retracement support from the 23.6%FR (RM2.44) limits downside risk.

Asian Markets Mixed as Traders Digest China Data

Asian markets traded mixed Monday as traders digest China economic data and assessed an assassination attempt on former U.S. President Donald Trump at a rally over the weekend. China’s National Bureau of Statistics on Monday said the country’s second-quarter GDP rose by 4.7% year on year, missing expectations of a 5.1% growth, according to a Reuter’s poll. June retail sales also missed estimates, rising 2% compared with the 3.3% growth forecast. Industrial production, however, beat expectations up by 5.3% in June from a year ago, higher than Reuters estimate of 5% growth. Separately, traders will be focused on the start of the Third Plenum, a meeting of China’s top leadership that’s expected to set long-term policy on a wide range of economic and political issues.

Traders were also monitoring the latest developments with the attempted assassination of former President Donald Trump over the weekend and its potential to lead to more political strife in the U.S. The Republican National Convention will begin late Monday in Milwaukee, Wisconsin with Trump leading President Joe Biden in national polls ahead of the election in November. South Korea’s Kospi inched higher by 0.14% to close at 2,860.92 and Australia’s S&P/ASX 200 added 0.73% to close at 8,017.60. The Shanghai Composite Index ended nearly unchanged at 2,974.01, while Hong Kong’s Hang Seng dropped 1.52% to 18,015.94. Japan’s markets are closed for a public holiday.

Wall Street Ends Higher on Trump Win Bets

Major Wall Street stock indices closed higher overnight, as increasing expectations of a second Donald Trump presidency in the wake of a failed assassination attempt raised hopes of a looser regulatory environment. The Dow Jones Industrial Average gained 0.53% to 40,211.72. The S&P 500 added 0.28% to 5,631.22 and the Nasdaq Composite rose 0.40% to 18,472.57. An assassination attempt in Pennsylvania on Saturday of Trump, the presumptive Republican nominee for president, appeared to improve his chances for election. A Trump presidency would presumably result in a more hawkish trade policy, an extension of tax cuts and deregulation in a host of areas ranging from climate change to cryptocurrencies.

The growing probability that the U.S. Federal Reserve will begin cutting its key interest rate as soon as September also helped feed risk appetite. Speaking before the Economic Club of Washington, Fed Chair Jerome Powell reiterated his belief that the U.S. economy can avoid recession, and recent data readings show progress in bringing inflation down to the central bank's 2% goal. Humana and UnitedHealth Group each rose in the session as the insurers could benefit from fewer cost pressures coming from a Republican administration.

Source: TA Research - 16 Jul 2024