Market review

• The MSCI Asia Pacific Index inched up 0.19-pt to 147.5 on technical rebound after tumbling 1.25% on 22 March ahead of a key health care vote in Congress seen as a proxy of President Donald Trump's mandate. Lawmakers have signaled any setback could delay enactment of tax cuts and spending increases, the prospects for which have underpinned the rally in risk assets since Donald Trump’s election in November.

• Tracking steadier regional markets, Bursa Malaysia recovered from 22 March’s selloff sparked by the overnight Wall Street correction, as local funds returned to bargain hunt while rotational plays on lower liners sustained overall market momentum. KLCI lost 1.3 pts after traded within a range of 6.8 pts between an intra-day high of 1,753.8 and a low of 1,747.0. Trading volume increased to 4.78bn shares worth RM3.67bn as compared to Wednesday’s 3.16bn shares worth RM2.75bn. Market breadth was positive with 596 gainers as compared to 378 losers.

• The Dow eased 5 pts overnight to 20,656 after fluctuated within 20619-20758 intraday, extending its losing streak to six sessions, as a delay in a closely watched health care vote raised questions about the Trump administration’s ability to win passage of its ambitious legislative agenda. Republican leaders hoped to vote on Thursday but there were signs the deadline could be pushed back. Losing or delaying it would bruise investors' confidence in Trump's ability to deliver on his promises of tax cuts and infrastructure spending.

Technical view

Extended consolidation seen

• We are likely to witness KLCI to extend its sideways consolidation within 1,758 (52-week high on 21 Mar) and 1,738 (22 Mar low) territory, as technical oscillators are hooking downward to neutralize ongoing overbought positions.

Market outlook

• Despite some mild bargain hunting activities on Wall Street, we expect the Dow to extend its widely anticipated overbought consolidations with 20,500 acts as immediate support, ahead of the Trump's Healthcare Reform Act vote.

• Mirroring yesterday’s trading pattern, sentiment on Bursa Malaysia will remain vigilant as a long-awaited profit taking consolidation should follow, which is welcomed as it is healthy for the market to consolidate recent strong gains and rebuild support for uptrend resumption ahead

Source: Hong Leong Investment Bank Research - 24 Mar 2017