Buoyed by positive sentiment in the overnight US market, the FBMKLCI rose 4.07pt to close at 1,770.07 yesterday, extending the gains for three consecutive days. Meanwhile, Asian shares rose to the highest level since December 2007 on strong earnings from some of the region’s key companies and the Federal Reserve’s signal that inflation remains persistently below its target. The MSCI Asia Pacific Index climbed 1%, the most since June 2, to 160.81 as of 4:47pm in Hong Kong, with all of its sector gauges rising. The FBMKLCI’s top gainers were CIMB Group Holdings (+3.0%), British American Tobacco (+0.8%) and DiGi.Com (+0.6%), while the top losers were Astro Malaysia Holdings (-2.0%), Telekom Malaysia (-1.6%) and Westports Holdings (-0.8%). In the broader market, gainers outpaced losers 425 to 410 with 410 counters unchanged. Turnover was 1.59b shares valued at RM1.97b.

From the technical perspective, the FBMKLCI formed higher highs and higher lows. It penetrated the 1,770 level yesterday and closed above the 21-day EMA, prompting an upgrade in the near-term outlook from neutral to bullish. The RSI line crossed the 50pt threshold, suggesting an increase in buying interest. However, given the uncertainties on the external front, we recommend investors approach the market cautiously. Profit-taking may kick in sooner amid recent gains. Support and resistance are as follows:

• Support: 1,752,1,742
• Resistance: 1,787, 1,800

US stocks closed mixed on Thursday as gains in the telecoms, oil & gas and consumer services sectors were offset by elosses in the technology, healthcare and basic materials sectors. The Dow Jones Industrial Average gained 0.4% to hit a new all-time high, the S&P 500 index lost 0.1%, and the NASDAQ Composite index declined 0.6%. Falling stocks outnumbered advancing ones on the New York Stock Exchange by 1,730 to 1,353, and 158 ended unchanged. On the Nasdaq Stock Exchange, 1,664 stocks fell and 822 advanced, while 139 ended unchanged.

Source: UOB Kay Hian Research - 28 Jul 2017