Market review

• Asian equities trended sideways, tracking the mixed sentiments on Wall Street. The Nikkei 225 fell 0.34%, while Shanghai Composite Index and Hang Seng Index added 0.35% and 0.37% respectively.

• The FBM KLCI traded towards an intra-day high of 1,757.99 pts before settling at 1,754.67 pts (+0.30%) on the back of last minute buying support led by PCHEM and MAYBANK. On the broader market, market breadth was positive with advancers leading decliners by a ratio of 496-to-477 stocks. Overall market volumes stood at 4.58bn, 23.9% lower compared to volumes two trading days ago.

• Wall Street plunged more than 1% led by financial stocks amid concerns over the timeline of execution by Donald Trump on his economic plans, coupled with dovish comments from the Fed which may affect the pace of the rate hikes moving forward.

Technical view

Positive MACD indicator, but overbought RSI and Stochastics oscillator

• The FBM KLCI continued to trend higher along the 1,750- 1,760 levels. The MACD Indicator is suggesting an uptrend position, while momentum oscillators are indicating overbought signals for the key index. KLCI’s support will be set around 1,720-1,730.

Market outlook

• As investors have priced in most of the “Trumponomics” into the rally since the start of the year, we expect traders to reassess Trump’s economic agenda. The Dow may retest the support of 20,500, followed by 20,300. Also, under the current market environment, investors might flock into safe haven asset such as gold.

• Meanwhile, on the local front, after an overheated trading activities over the past three trading days and negative sentiments in the overseas markets, we expect profit taking activities to emerge on small caps and lower liners, especially after recent rally in some penny stocks. Supports of the FBM Small Cap and FBM ACE indices are likely be located around 16,690 and 5,500.

• Closed positions. Yesterday, we squared off our positions on PPHB (9.8% gain) after hitting above R2 upside targets and BRAHIMS (3.9% loss) amid weakening technicals.

Source: Hong Leong Investment Bank Research - 22 Mar 2017