Market review

• Asian stock markets traded on a softer tone led by Nikkei 225 (-0.16%) after yen strengthen against the US Dollar, coupled with Toshiba (-12.2%) facing potential delisting risk. Meanwhile, the Hang Seng Index slipped 0.14%, but Shanghai Composite Index added 0.08%.

• Share prices on the local front trended on a weaker tone as the FBM KLCI continued to slide below 1,720 and settled the session at 1,717.36 pts (-0.30%). Also, selling pressure extended on the broader market; there were 480 decliners, 395 advancers while 386 traded unchanged. Overall market volumes stood above the 3.00bn mark at 3.30bn shares, worth RM2.23bn.

• Wall Street cheered positively after the Fed increased interest rates by 0.25% to 0.75%-1.00% range. US dollar index fell 0.94%, while gold and Brent oil advanced 1.73% and 1.75% respectively. Meanwhile, the Dow and S&P500 rose 0.54% and 0.84% respectively led by rebound in energy stocks after a recovery in oil prices.

Technical view

Selling pressure further emerged as sentiments stayed negatively below 1,720

• With the MACD Line pointing downwards and MACD Histogram extended another red bar, momentum is expanding on the negative side. Also, the FBM KLCI has slipped below SMA10, we expect the upside will be capped around the 1,728-1,730 levels. The support will be pegged at 1,700.

Market outlook

• As the Fed's move was widely anticipated, stock markets reacted on a positive note. Also, Janet Yellen maintained with potential two more hikes in 2017 with the view that the economy is recovering on a healthy pace, in-line with Fed's objectives.

• Buying interest might spillover towards Malaysia's stock market after a relief rally in Wall Street, coupled with higher oil prices. The FBM KLCI might regain strength above 1,720, potentially revisiting the 1,730 level.

• Trading Buy – TEXCYCL. Texcycle is looking into overseas expansion on the waste management within the ASEAN region. Besides, a power purchase agreement with Tenaga Nasional Berhad was signed on 2nd Feb 2017 at a fixed tariff rate of RM0.4766 per kWh to supply 2MW per hour of electricity to Tenaga Nasional Berhad, which will be commencing no later than 28th Jan 2018 for 16 years. Monitor for a breakout above the SMA200 (RM1.16) level, targeting the RM1.22 and RM1.35 levels, followed by the LT technical target of RM1.47. Support will be pegged around RM1.08 and RM1.02, while cut loss at RM1.00.

Source: Hong Leong Investment Bank Research - 16 Mar 2017