Market review

• Despite the US airstrike on Syria, Asian stock markets were mostly higher with Nikkei 225 and Shanghai Composite Index rising 0.36% and 0.18% respectively, but Hang Seng Index slid 0.03%.

• Sentiments on the local front remained sluggish on the broader market as geopolitical tensions sent a cautious tone to the markets when US strikes Syria with attacks, which escalated the Brent crude oil prices near the US$56 level; oil and gas stocks were focused. Market breadth was negative with on-going profit taking activities. The FBM KLCI, however ended on a positive note at 1,741.72 pts (+0.12%) amid a last minute push after traded most of the time in the negative territory.

• U.S. stock markets ended on a flattish tone amid softer than-expected jobs data, which added only 98,000 jobs last month, versus an estimated figure of 180,000. Meanwhile, unemployment rate declined to 4.5% from 4.7%. Also, the airstrike in Syria put a cautious tone in the markets. The Dow fell marginally by 0.03% (-0.03% wow), while S&P500 declined 0.08% (-0.30% wow).

Technical view

Weekly MACD Histogram extend another red bar

• The weekly and daily MACD Indicators are slightly weaker. Daily RSI has hooked below 50, while weekly RSI is overbought. KLCI’s upside may be capped around 1,760.

Market outlook

• Despite the smooth ending on the Trump-Xi summit, cautious mode continues to build within the market environment after the airstrike in Syria, we believed that overseas stock markets may persist with the downward bias view and the Dow may trend lower towards 20,500.

• Meanwhile, shares on the local front could take a slightly positive stance after a few weeks of consolidation. Should there be any breakout above 1,750 on the FBM KLCI, it may retest the 1,760 level. Also, given the recovering Brent crude oil prices above US$54, we may anticipate trading interest to pick up within oil and gas this week.

• Trading Buy - Genting. Based on HLIB estimates, the impact to GENTING’s FY17 PBT is minimal at <1% following the passing of the Malaysian Tourism Tax Bill on 6 April. Technically, although MACD is still flashing a negative signal, a floor has been established near RM9.30 following last Friday’s 7 sen rebound, supported by the upticks in RSI and slow stochastic oscillators coupled with the formation of a bullish Harami pattern, indicating potential downtrend reversal. Key upside targets are RM9.75-10.00 if share prices are able to stage a meaningful breakout above RM9.50. On the flipside, key supports are at RM9.17-9.30. Cut loss at RM9.15

Source: Hong Leong Investment Bank Research - 10 Apr 2017