Market Review

Malaysia: The FBM KLCI (+1.4%) delivered its best performance in almost a month as the key index advanced for the fourth straight session in line with gains across regional peers yesterday, buoyed by the positive development of a potential vaccine for Covid-19 by Pfizer and BioNTech. The lower liners also extended their gains, while the broader market closed mostly higher.

Global markets: Despite paring off most of their intraday gains, US stockmarkets remained in the green as the Dow gained 0.4% supported by stronger-than expected jobs data after the U.S. economy added 4.8m jobs in June 2020 (1.8m more than analysts’ expectations). Both European and Asia stockmarkets also advanced.

The Day Ahead

The potential vaccine for Covid-19 provided a boost for global equities including the FBM KLCI as investors pinned their hopes for normalcy. The positive developments may attribute to the economy recovery towards pre-Covid-19 levels in line with initial expectations by consensus. Hence, we see the key index to build onto its gains, largely on track to snap a 3-week losing streak.

Sector focus: We continue to favour the tech sector as a proxy to the record high Nasdaq overnight with companies operations resuming to normalcy. Meanwhile, the recent low figures of local Covid-19 cases may not see the extension of loan moratorium will bode well for the beaten down financial sector as well.

FBMKLCI Technical Outlook

The FBM KLCI has formed another bullish candle after quickly recovering from its intraday losses yesterday. Following the breakout above the 1,515 resistance, further strides may propel the local bourse towards the next resistance at 1,550, followed by 1,570. Support remains pegged at 1,500 followed by 1,475. Indicators have also turned slightly positive as the MACD Histogram has extended another green bar, while the RSI remains on the positive bias tone

Source: Mplus Research - 3 Jul 2020