Market Review

Malaysia: Tracking the gains on Wall Street overnight, the FBM KLCI (+0.6%) extended its gains after enduring a choppy trading session yesterday. Much of the gains were boosted by selected telco heavyweights as well as Genting-related heavyweights following the announcement of cost reduction measures through trimming of head counts. The lower liners also extended their gains, while broader market ended mostly higher yesterday.

Global markets: US stockmarkets snapped a three-day winning streak as the Dow fell 0.6% amid the lingering concern over the rising Covid-19 cases in several states in US and China. Elsewhere, both the European and Asia markets also ended mostly higher yesterday.

The Day Ahead

It was another sound performance on the local bourse as market players continue to build-up onto their positions following the recent volatility. For now, we expect the nibbling to continue, allowing the key index to trade in a consolidation manner following the recent pullback. Any gains, however, may be tempered by new clusters of Covid-19 infections coupled with the geopolitical tension between India and China as well as South Korea and North Korea.

Sector focus: We see plantation stocks to make a comeback as crude palm oil prices held steady above the RM2,300 per tonne level, while there were no compensation costs for the deferment of High Speed Rail (HSR) project till 31st December 2020 is an indirect boon for construction players to potentially keep their projected margins intact.

FBMKLCI Technical Outlook

The FBM KLCI managed to form a hammer candle after recovering all its intraday losses as the key index is now re-testing the daily EMA9 level. With the 1,500 level continues to hold, we think that upsides are still in the cards, allowing the key index to re-test the immediate resistance at 1,550, followed by 1,590. On the flipside, should the support is located at 1,490 should the 1,500 level fails to defend.

Source: Mplus Research - 18 Jun 2020