Market review

• Asia’s major benchmark indices trended negatively ahead of Donald Trump’s speech. Nikkei 225 (-0.91%) led the regional stock markets lower; Shanghai Composite Index and Hang Seng Index fell 0.75% and 0.17% respectively.

• Similarly, trading sentiments remained weak after the FBM KLCI violated the 1,700 level last week; the key index fell another 4.51 pts (-0.27%) to 1,693.84 pts. On the broader market, there were 643 decliners, 296 advancers while 300 traded unchanged. Overall market volumes stood at 2.90bn, worth RM2.16bn.

• Wall Street managed to eke out marginal gains as the winning streak on the Dow continues for the twelfth session on the back of Trump's major infrastructure statement ahead of the speech, coupled with a potential of increase in military spending. The Dow and S&P 500 were marginally higher 0.08% and 0.06% respectively.

Technical view

Another bearish candle after the key index violated 1,700

• The FBM KLCI retested the intra-day high near the 1,706 level, but selling pressure emerged and the key index formed another black candle, ended the day below 1,700. As the MACD Indicator has formed a “sell” signal last week, the near term momentum is likely to stay negative. Both the RSI and Stochastics oscillators are pointing downwards.

Market outlook

• In the US, market sentiments were cautious and trended on a less volatile manner ahead of Trump's speech as investors will be focusing on further details on Donald Trump's economic plans. In the meantime, uptrend on Wall Street is still intact, but it is overbought on the Dow – trailing support will be set around 20,670.

• We may expect the negative sentiments to prevail ahead of Trump’s event, coupled with the overbought condition on FBM KLCI. The key index may retrace lower towards the 1,680 level as selling pressure could be picking up on a cautious market environment.

• Closed positions. Yesterday, we squared off our positions in MKH (3.8% gain), TALIWRK (4.8% gain), GKENT (3.5% gain), CENTURY (1.1% loss) and EVERGRN (6.1% loss). We also closed our Take profit call on CIMB (2.9% gain)

Source: Hong Leong Investment Bank Research - 28 Feb 2017