Market review

• Asian key regional indices ended mostly lower as Trump Xi summit this week sent a cautious tone to the market sentiments at the end of the first quarter. The Nikkei 225 and Hang Seng Index declined 0.81% and 0.78% respectively.

• Despite the positive performance in the overseas market, share prices on the local front trended lower on the final day of 1Q17 as profit taking activities emerged; the FBM KLCI fell 0.52% to 1,740.09 pts (-0.32% wow). Market breadth was negative with 466 decliners, 431 gainers, while 381 traded unchanged. Nevertheless, on the quarterly basis, the KLCI has advanced 6.0%.

• On the Wall Street, shares lost some ground as the Dow and S&P500 declined 0.31% and 0.23% respectively led by financials sector, coupled with weaker than expected consumer sentiment index, which slipped to 96.9 in March vs. an estimate figure of 97.6. However, on quarterly basis, the Dow and S&P500 advanced 4.6% and 5.5% respectively.

Technical view

Rejected the SMA200-W for the second consecutive week, forming inverted hammer bar

• The weekly MACD indicator is hovering above zero, but the weekly MACD Histogram has turned weaker last week. Meanwhile, the weekly Stochastics is suggesting that the weekly KLCI is overbought. Should the KLCI slides below 1,740, next support will be pegged around 1,720.

Market outlook

• On overseas markets, we may expect short term consolidation after second consecutive week of negative closing as investors may be focusing on the upcoming US reporting season. Also, a few key economic events to watch out this week will be FOMC meeting minutes and US March nonfarm payroll report.

• Meanwhile, share prices on the local bourse could take a mild breather after FBM KLCI rejected the weekly SMA200. Also, weekly Stochastics oscillator is overbought, index heavyweight could succumbed to profit taking activities. Hence, trading focus may be shifted towards the lower liners.

• Please refer to our Retail Research report entitled 2Q17 Quarterly Retail Strategy for recommendations for 2Q after a broad rally in 1Q.

Source: Hong Leong Investment Bank Research - 3 Apr 2017