Market Review

Malaysia: The FBM KLCI (-0.3%) extended its losses after lingering mostly in the negative territory yesterday, dragged down by Petronas-related heavyweights after the national oil company withdrew the legal action against 5.0% petroleum product sales tax imposed by the Sarawak state government. The lower liners also retreated with the FBM ACE snapping a three-day winning streak, while broader market finished mixed.

Global markets: US stockmarkets endured another round of rout as the Dow sank 2.7%, while the Nasdaq (-2.0%) snapped an eight-day winning streak amid the rising cases of Covid-19, coupled with the International Monetary Fund move to slash global growth rate for FY20 and FY21 respectively. European stockmarkets slumped, while Asia stockmarkets ended mixed.

The Day Ahead

Moving forward, we reckon that the weakness across Wall Street overnight may permeates to stocks across Bursa Malaysia which we should excise caution should share prices falls below their respective support levels. Already, IMF’s decision to downgrade global growth rate does not bode well on the global scale as expectations that economic recovery could take a stall against the consensus estimates of a recovery in the second half of the year.

Sector focus: Amid the renewed volatility, we favour the safe haven asset players with gold prices hovering above US$1,700 level.

FBMKLCI Technical Outlook

The FBM KLCI remains downbeat as the key index succumbs to selling pressure and closed below the daily EMA20 level or the first time since 6th May 2020. For now, we continue to monitor the key index performance that is hovering around the 1,500 psychological level. Should the aforementioned level fails to hold, we think that there could be further weakness with an interim support located at 1,490, followed by 1,460. Key resistance will be pegged around the 1,530 and 1,560 levels. The MACD Indicator continues to point lower, but the RSI is hovering above 50.

Market Scorecard

Source: Mplus Research - 25 Jun 2020