Market Review

Malaysia: The FBM KLCI (-1.4%) endured another volatile spell after lingering in the negative territory for the entire trading session yesterday. The weakness was mainly underpinned by the concern over the rising number of Covid-19 cases across several states in both the US and China. At the same time, the lower liners also retreated, while broader market was splashed in red.

Global markets: US stockmakets finished on a mixed note after lingering mostly in the negative territory as the Dow fell 0.2%, but the S&P500 added 0.1%; the latter was boosted by the energy sector on higher crude oil prices. European equities finished lower while and Asia markets closed mixed yesterday.

The Day Ahead

We think that volatility will remain a feature over the near term as investors were quick to lock in gains on any signs of negativity. In the meantime, the declining trading volumes that fell to its lowest level since end-April 2020 suggested that investors’ sentiment has turned slightly risk averse for the time being. Following yesterday’s sharp selling pressure, we think that mild bargain hunting activities may take place, but gains will likely to be tempered by quick profit taking activities.

Sector focus: While we continue to favour the plantations sector amid the sustainability of crude palm oil prices above RM2,300 per tonne, the energy sector will also be in focus amid the higher Brent oil prices that finished above US$41 per barrel for the first time in six days, forming a flag breakout.

FBMKLCI Technical Outlook

The selling activities have once again sent the FBM KLCI towards the daily EMA20 level as the key index has slipped below the daily SMA200 level. For now, we continue to observe the 1,500 psychological level. A recovery may see the key index retaining its position towards the consolidation zone with immediate resistance at 1,550. In contrast, the immediate support is pegged at 1,490, followed by 1,460. Indicators are on a mixed note with the MACD Indicator turning lower, but remains above the zero level, while the RSI remains above 50.

Source: Mplus Research - 19 Jun 2020