Market Review

Malaysia: The FBM KLCI (+1.3%) recovered some of its previous session slump as bargain hunting kicked in alongside with gains across regional markets, whilst the higher commodity prices (both the crude oil and crude palm oil) and the stronger ringgit also shored up the sentiment. The lower liners advanced, while all 13 major sectors finished higher yesterday.

Global markets: US stockmarkets extended their gains as the Dow rose 2.0% boosted by the solid retail sales data that rose 17.7% MoM that is well above the 8.0% MoM forecast by economists. Both the European and Asia markets also marched higher taking cue from gains on Wall Street.

The Day Ahead

Tracking the gains on Wall Street overnight, we see stocks across Bursa Malaysia to trend higher as investors resume their quest on their streak of recovery. Should the 1,500 level continues to hold, we see more upsides supported by the higher commodity prices. The widely positive sentiment also suggest that buying support remains on the table over the foreseeable future.

Sector focus: Following yesterday’s call on the energy sector which has outperformed its peers (+5.6%) yesterday, we continue to think that the higher Brent oil prices that is hovering around the US$40 bbl may trigger firmer trading interest within the energy sector, while number forecast operators may also tick higher on their resumption of operations following three-month long closure.

FBMKLCI Technical Outlook

The FBM KLCI has gapped up to form a bullish harami candle rebounding off the EMA20 level and subsequently closed marginally above the SMA200 yesterday. The recovery also sent the local bourse to re-capture the 1,500 psychological level. Amid the abated selling activities and the 1,500 level being surpassed again, we think that further nibbling will take place over the near term. For the time being, we think that gains will be capped towards the 1,590 with the interim resistance at 1,550. Downside risk is pegged at the 1,500, followed by 1,490.

Source: Mplus Research - 17 Jun 2020