Market Review

Malaysia: The FBM KLCI (-3.1%) suffered another whiplash alongside with the weakness across global markets on the back of the fresh concern over the pace of economic recovery. The lower liners all sank, while all 13 major sectors finished in the red with the healthcare sector (-7.6%) suffered the biggest loss.

Global markets: US stockmarkets recovered from their intraday losses to finish higher overnight as the Dow climbed 0.6% after the US Federal Reserve will begin purchases of individual corporate bonds. Both the European and Asia markets ended lower spooked by the recent volatility on Wall Street.

The Day Ahead

Renewed volatility has kicked across global equities with stocks across Bursa was not spared yesterday. The pullback may appear healthy for the time being for investors to digest their gains while taking this opportunity to re-assess the economic situation. Under the prevailing condition, we think that a consolidation may take place over the near term in view of the lack of fresh leads.

Sector focus: The recovery of Brent oil prices towards the US$40 bbl may see oil & gas stocks recovering in tandem.

The FBM KLCI has formed a bearish candle to after lingering in the negative territory for the entire trading session yesterday. The sharp pullback has also sent the key index to slip marginally below the 1,500 psychological level. For now, we observe the key index’s movement along the 1,500 and should the aforementioned level unable to hold, we see downside risk to be more prevalent at current juncture with next support at 1,460. In contrast, any recovery is expected to be mild with gains likely to be limited towards the 1,530-1,550.

Source: Mplus Research - 16 Jun 2020