Market Review

Malaysia: The FBM KLCI (+0.01%) edged marginally higher after trading in a lacklustre manner prior to the U.S. Federal Reserve monetary policy decision. The lower liners all advanced, while consumer products and services (-0.4%), financial services (-0.2%) and utilities (-0.1%) sectors underperformed the broader market.

Global markets: US stock markets extended their losses as the Dow slipped 1.0% after the US Federal Reserve reckons that Covid-19 could result in permanent economic damage while signalled further stimulus efforts. European equities also faltered for the third straight session with France’s industrial production sank - 20.1% MoM in April 2020, while Asia equities finished on a mixed note.

The Day Ahead

Following the U.S. Federal Reserve move to keep benchmark interest rates unchanged which was in line with market expectations while signalling for a gloomy economic outlook, we see the equities markets to take a step backward. On the local front, sentiment will continue to be boosted by the re-opening of economic activities that could re-ignite the economic growth in 2H20. However, we do note that gains will be measured as trading activities starts to taper in recent days.

Sector focus: The technology sector (+4.4%) was the biggest winner yesterday may see gains to build up on the favourable outlook from the U.S.-based Semiconductor Equipment Manufacturers Industry (SEMI), while oil & gas players may head higher with Brent oil prices holding above the US$40 p/bbl level

FBMKLCI Technical Outlook

Expectedly, the FBM KLCI has consolidated as key index formed a Doji candlestick implies uncertainties on the local bourse amid the lack of fresh leads. We expect the consolidation to linger over time as investors looks to digest the recent uptick momentum, allowing room for further upsides over the foreseeable future. We continue to think that the 1,600 psychological level remains as the key resistance, while the support is pegged around the 1,530 level

Source: Mplus Research - 11 Jun 2020