Market Review

Malaysia: The FBM KLCI (-0.3%) reacted negatively to the White House trade adviser Peter Navarro comments that the trade deal with China is over as the key index nosedived at the start of the trading bell before recouping most of the intraday losses yesterday. The lower liners ended mixed, while the financial services sector (-1.1%) underperformed the mixed broader market.

Global markets: US stockmarkets extended their gains as the Dow added 0.5% on optimism over another round of stimulus package will be pass by the Congress in July 2020, coupled with the higher-than-expected new home sales data in May. Earlier, both the European and Asia stockmarkets advanced on the back of US President Donald Trump re-affirmation on trade deal with China is still in place.

The Day Ahead

After a knee jerk reaction pullback yesterday, bargain hunting activities were quick to take precedence as risk appetite on equities market remain firm. For now, investors would continue to monitor for any developments surrounding the US China trade relations that would dictate the market’s direction.

Sector focus: Plastic packaging companies are on the move amid the higher demand coupled with the higher Polyethylene (PE) prices that hovers near three months high. Meanwhile, the rapid adoption of e-wallet usage that placed Malaysia first amongst Southeast Asia countries may see firmer trading interest within the e payment service community.

FBMKLCI Technical Outlook

The FBM KLCI managed to form a hammer candle to retain its position above the daily EMA20 level after recovering most of the intraday losses yesterday. With the 1,500 psychological level continues to hold, we think that the gradual recovery may push the local bourse towards the immediate resistance at 1,550, followed by 1,590. Downside risk remains supported at 1,490, followed by 1,460. Indicators are slightly weaker with the MACD Indicator turning lower (but remains above the zero level), while the RSI is hovering slightly above 50.

Source: Mplus Research - 24 Jun 2020