Bullish market but caution is advised on potential risks with the looming threat of a US recession and geopolitical tensions while "Investors tread cautiously"
The FBM KLCI (+0.2%) eked our minor gains, lifted by the eleventh-hour buying support in selected index heavyweights yesterday. The lower liners also advanced, while the Telco & Media (-0.7%) and Transport & Logistics (-0.2%) sectors underperformed the positive sectorial peers.
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With US CPI data coming in tune with consensus expectations, the prospects of interest rate cut in September was reinforced.
“Therefore, we expect the key index to march higher, attempting to build onto its baby steps of recovery after stabilising above 1,600 pts recently. Meanwhile, the lower liners are also turning more favourable, supported by the positive market breadth as bargain hunting activities remain in place. Going forward, key economic data in focus today would be China’s Retail Sales, Industrial Production and Unemployment Rate as well as US Retail Sales, Manufacturing Production and Industrial Production.
“We favour the Construction sector, riding onto the improving prospects and fundamentals. Meanwhile, export-related players may be impacted by the weakening of USD against a basket of currencies, including the Malaysia Ringgit which fell to 16-month low,” says APEX.
The FBM KLCI formed a gapped up to close above SMA50 and middle Bollinger Band yesterday. Indicators have turned positive as the MACD Line climbed above the Signal Line, while the RSI hovered above 50. The immediate resistance is located at 1,630. Support is envisaged around 1,530.
Wall Street marched higher as the Dow extended its gains to close above the 40,000 psychological level after the US CPI data which slowed for the fourth straight month to 2.9% yoy in July 2024 came within market expectations. European stock markets also advanced, while Asia stock markets ended mostly positive.
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