KLCI on course to start to 2H19 on positive note, up 0.35%

TheEdge Mon, Jul 01, 2019 10:23am - 4 years View Original


KUALA LUMPUR (July 1): The FBM KLCI pared some of its gains at mid-morning today, but remained up 0.35% in line with gains at regional markets.

At 10am, the FBM KLCI was up 5.88 points to 1,678.01. The index had earlier risen to a high of 1,680.96.

Gainers led losers by 436 to 106, while 263 counters traded unchanged. Volume was 826.93 million shares valued at RM412.24 million.

The gainers included Heineken Malaysia Bhd, Malaysian Pacific Industries Bhd, British American Tobacco (M) Bhd, Hong Leong Industries Bhd, Carlsberg Brewery Malaysia Bhd, RHB Bank Bhd, Pentamaster Corp Bhd, Tenaga Nasional Bhd and KESM Industries Bhd.

The actives included KNM Group Bhd, Bumi Armada Bhd, Ekovest Bhd, Iskandar Waterfront City Bhd, Datasonic Group Bhd, Sapura Energy Bhd and Focus Dynamics Group Bhd.

The decliners included GHL Systems Bhd, PPB Group Bhd, Hong Leong Bank Bhd, UOA Development Bhd and Sime Darby Plantation Bhd.

Stocks rallied and bonds retreated in Asia on Monday as a thaw in the Sino-US trade dispute tempered risks to the global economy, leading investors to pare wagers on aggressive policy easing by the major central banks, according to Reuters.

The US dollar gained on the safe-haven yen as Treasury yields jumped and futures reined in bets for a half-point rate cut from the US Federal Reserve (Fed) this month, it said.

Hong Leong IB Research said that after the crucial bilateral President Trump-Xi meeting last Saturday, there is a chance for Dow to retest all-time high at 26,952 (Oct 3, 2018).

However, it said further significant upside is dented by legacy issues, namely intellectual property rights and technology transfer.

"On Fed rates direction, consensus are unlikely to significantly reduce their expectations for a rate cut in July despite global trade tensions easing, with focus on this week's upcoming ISM manufacturing and services as well as the US payrolls data.

"Meanwhile, the US 2Q19 earnings season will commence next week, with the consensus estimate earnings for the S&P 500 companies to ease 2.9% year-on-year from a flat growth reading in the 1Q19 amid a combination of slowing economic growth and rising input expenses. Resistance is pegged at 26,900-27,200 while supports are near 26,200-26,500 levels.

"After the ice-breaking Trump-Xi talk last Saturday, KLCI may breathe a sigh of relief, boosted by a truce in the US-China trade war and a resumption of trade negotiations after a six-week stalemate.

"Moreover, Trump said that he will allow Huawei to buy some products from US suppliers and Xi agreed to buy a 'tremendous' amount of US agricultural products," it said.

Thus, the research house said risk assets, i.e. stocks, commodities and emerging markets are set to rally while the safe-havens gold, yen and Swiss franc could take a breather, but the lack of a timeline for progress on key issues, namely, intellectual property rights and technology transfer may cap "bullish topside ambitions".

"Resistance is pegged at 1,682-1,700 while supports are near 1,655-1,668 levels," it said.

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