Market review

• Asian stock markets were stronger on Friday ahead of the FOMC meeting next week. Also, Japanese yen weakened against the greenback has lifted the sentiments on the Nikkei 225 by 1.48% to 19,604.61 pts (+0.70% wow). Meanwhile, the Hang Seng Index added 0.13% at 23,568.67 pts (+0.07% wow) and MSCI Asia Pacific Index ended higher by 0.70% at 144.35 pts (+0.38% wow).

• Shares on Bursa Malaysia trended mixed as the FBM KLCI was hovering between a narrow range of 1,713- 1,718 before closing marginally higher by 0.01% at 1,717.58 pts (+0.54% wow). Market breadth was positive with 471 advancers, 435 decliners, while 371 traded unchanged. Overall market volumes stood at 3.40bn shares, worth RM3.19bn.

• U.S. stock markets ended higher on Friday with the solid February jobs reports, which added 235,000 jobs vs. analyst estimates of 200,000, reinforcing that the economy is recovering. Also, the data that came in reaffirming the potential rates hike in the upcoming FOMC meeting. The Dow rose 0.55% on Friday to 20,902.98 pts (-0.49% wow).

Technical view

Cautious sentiments likely to persist and KLCI may consolidate sideways below 1,720

• The weekly FBM KLCI’s chart has formed a shooting star candle, rejecting the 1,730 level. Also, the weekly RSI is above 70 (overbought). Meanwhile, the daily MACD Histogram has extended another red bar. The daily RSI is trending lower towards 50. Hence, the FBM KLCI’s upside might be capped around 1,730-1,750, while the support will be anchored around the 1,700 level.

Market outlook

• Despite Wall Street ended higher last Friday, we expect more consolidation to be seen as investors would take a wait-and-see stance ahead of FOMC meeting, coupled with softer Brent oil prices, which plunged towards US$51.30 (-7.98% wow) last week.

• Meanwhile, share prices on Bursa Malaysia may be due for a short term consolidation as the FBM KLCI is trading near the resistance level of 1,720. However, as the FBM Small Cap still trending positively above 16,000, traders may look for opportunities under the small caps and lower liners for proxies towards GLC-linked theme play.

• Closed positions. Last Friday, we squared off our positions on Mitra (1.6% gain) due to expiry and Ranhill (2.9% gain) after hitting above R1 upside targets.

Source: Hong Leong Investment Bank Research - 13 Mar 2017