Market review

• Asian key indices ended mixed yesterday amid lingering worries over the repercussions of a “hard Brexit” and looming Trump’s inauguration. Market sentiments were also affected by the US$ strength as Yellen mentioned that the central bank could be expecting a few rate hikes until end of 2019.

• Tracking cautious regional markets, KLCI slipped as much as 6.66 pts towards the intraday low before ending 1.49 pts higher at 1,666.50 pts, helped by selected buying interests in IHH (+7.0 sen), GENM (+9.0 sen) and MAYBANK (+4.0 sen). Overall trading volumes, however were 0.6% lower at 1.87bn shares worth RM1.73bn, supported by negative market breadth of 446 losers against 331 gainers.

• The Dow fell 72.32 pts to 19,732.40 pts, recording its fifth consecutive day of losses. Sentiment was dampened by the anxiety ahead of the Trump’s inauguration tonight, accompanied by lower-than-expected weekly jobless claims, which might support Yellen’s calls for a few rates hike by end of 2019.

Technical view

KLCI extended its ST rebound

• Despite weakening trend and momentum indicators, the formation of long-legged Doji and KLCI closing above 100-d and 200-d SMAs could be indicating ST support along 1650. We remain ST positive on KLCI barring any decisive violation below the 1650 zone. Key resistances will be set around the 1,680-1,690 levels.

Market outlook

• Lackluster buying interests are likely to prevail today as Trump’s inauguration is set to unleash a cascade of stock market anxiety.

• As the Dow is trading below the 10-d SMA, we expect the index to trade on a downward bias view over the near term. Next support may be located around the 19,300- 19,400 levels.

• Meanwhile, based on the trading activities yesterday, selling interest may extend ahead of the CNY holidays, given active volumes on small caps and ACE market shares over the past two weeks. Nevertheless, bargain hunting activities are likely to stay within the property and construction stocks

Source: Hong Leong Investment Bank Research - 20 Jan 2017