Market review

• Asian stock markets ended mostly lower as the Brexit talk started and investors were locking in profits ahead of the closure of 1Q2017. The Nikkei 225 and Shanghai Composite Index plunged 0.80% and 1.00% respectively, while Hang Seng index declined 0.37%.

• Meanwhile, sentiments on Bursa Malaysia were fairly mixed as some shares succumbed to profit taking activities after a mixed performance on the overnight Wall Street. The FBM KLCI fell marginally by 0.07%. However, market breadth was positive as gainers led losers with a ratio of 465-to-420 stocks. Overall market volumes slipped 5.6% to 3.21bn vs. 3.40bn.

• US stock markets trended positively as crude oil price continued to rebound higher after officials from Kuwait and some OPEC members supported the idea of extending the production cut measures into 2H2017. The Dow rose 0.33%, while S&P 500 added 0.29%.

Technical view

Still overbought for the FBM KLCI near 1,760

• Despite the uptrend position on the FBM KLCI, the momentum indicator such as Stochastics oscillator is suggesting that the FBM KLCI is overbought after trading near the 1,760 level. The MACD Indicator has issued a “sell” signal. The FBM KLCI’s support will be pegged around 1,740-1,745.

Market outlook

• US market sentiments improved after rebound extended for another session in crude oil, coupled with the positive revision of 4Q16 GDP numbers. We opine that the positive trading interest should sustain over near term on Wall Street.

• Similarly, trading interest on the local front could favour the oil and gas heavyweights amid a rebound in crude oil, potentially lifting FBM KLCI on a mildly higher note. Also, traders may look out for opportunities under the small cap range O&G stocks.

Source: Hong Leong Investment Bank Research - 31 Mar 2017