Rebound in sight

Market Review

Malaysia: Tracking the weakness on Wall Street overnight, the FBM KLCI (-0.9%) succumbed to another round of selling pressure on the back of the renewed volatility on Wall Street overnight following World Bank’s move to slash Malaysia’s GDP forecast from -0.1% YoY to -3.1% YoY for 2020. The lower liners trended lower, while all broader market was splashed in red.

Global markets: US stockmarkets rebounded from their previous session rout as the Dow rose 1.2% on the back of the lower than expected new jobless claims while the final reading of 1QFY20 GDP contracted by 5.0% YoY. European stockmarkets also rebounded, but Asia equities finished mostly lower yesterday.

The Day Ahead

After three consecutive days of downturn, we think that bargain hunting activities may take precedence as investors nibble on beaten down stocks. The recovery will also take cue from the positive developments on Wall Street overnight, coupled with the higher crude oil prices. Gains, however, may be measured owing to the lack of fresh positive leads as investors remain concern over the rising cases of Covid- 19 and weaker economic outlook.

Sector focus: The higher domestic poultry prices that almost doubled since three months ago may garner stronger trading interests in consumer products stocks in relation to poultry players.

The FBM KLCI gapped down and lingered in the negative territory for the entire trading session as the key index remains below the daily EMA20 level. In view of the potential rebound, we continue to monitor on developments over the 1,500 psychological level with key resistances remain pegged around the 1,530 and 1,560 levels. Support is now located around 1,460, followed by 1,430. The MACD Indicator continues to point lower, while the RSI has tripped into the oversold region.

Source: Mplus Research - 26 Jun 2020