Market review

• Tracking the positive performance on the overnight Wall Street, buying interest emerged and Asian stock markets gained positively amid stronger-than-expected Japanese export data, coupled with improving South Korea GDP, which grew 0.4% from previous quarter. Nikkei 225 led the pack by advancing 1.43%, while Hang Seng Index and Shanghai Composite Index added 0.43% and 0.22% respectively.

• Similarly, trading tone on the local front was firmer with the FBM KLCI rising 0.19% towards 1,683.93 pts led by Axiata and Genting Malaysia, which added 7.0 sen each. Also, market breadth was positive as advancers ahead of decliners by a ratio of 4-to-3. However, softer trading activities were noted on the broader market as overall traded volumes stood at 1.30bn, below the three-month average volumes of 1.56bn.

• Wall Street cheered Donald trump's business friendly policies with a triple digit gains on the Dow marking above the important resistance of 20,000 at 20,068.51 pts (+0.78%), while S&P500 and Nasdaq continued to surge to new all-time high. However, dollar index extended its move below 100.

Technical view

The FBM KLCI steadied above 1,680, heading towards next resistance of 1,700

• The MACD Indicator expanded positively above zero, while the RSI is hovering above 50. Meanwhile, the stochastics oscillator is trending into the overbought region – indicating short term rally might be taking a breather over the near term.

Market outlook

• Positive sentiments emerged after Donald Trump made some statements to the automotive leaders in the US, affirming the needs to create more jobs and bring back the production into the US. Hence, we may anticipate more policies that are conducive to business to be made by Donald Trump over the near term. Meanwhile, the Dow's next resistance will be envisaged around 20,300.

• Shares on Bursa Malaysia are likely to track the bullish tone on the overseas market and the FBM KLCI may retest the 1,700 level. However, traders may adopt the selling-into-strength strategy, which may limit the upside along the 1,700 level after stochastics oscillator is overbought.

Source: Hong Leong Investment Bank Research - 26 Jan 2017