Market review

• Asian markets ended mixed again on the back of a 0.7% drop in NIKKEI, led by a selloff in exporters amid stronger Yen following Trump’s remarks that he favours a low interest rates and a soft greenback. Despite easing confrontational tone against China after Trump acknowledged that China is not a currency manipulator, sentiment remained tense amid rising geopolitical unease in Korean Peninsula that North Korea could soon conduct a sixth nuclear test or more missile launches.

• Tracking negative regional markets, KLCI surrendered most of its 8.2pts gains on 12 Apr with a 5.9-pt loss. Market breadth was bearish with 220 gainers as compared to 765 losers.

• The Dow slid 138 pts to 20,453 (-1% wow), cementing a 3- day losing streak after the U.S. dropped "the mother of all bombs" in Afghanistan to combat IS while bank stocks fell despite strong earnings from JPMorgan Chase and Citigroup. Meanwhile, reduced volumes in the shorter trading week before Easter holiday may have compounded the swings as the 1Q17 reporting season will start in earnest next week.

Technical view

A breakdown below the fragile 30-d SMA support will accelerate selldown towards 1705-1726

• We reiterate that KLCI near term outlook remains dim unless it can swiftly regain its composure above the support trend line near 1747. Failure to do so will witness the index remaining in consolidation mode. A strong close above 1747 will spur KLCI to retest 1750-1759 levels. On the contrary, a fall below the fragile support of 1,736 (or 30-d SMA) again would suggest a corrective move towards 1,726 (23.6% FR) and 1,705 (38.2% FR) levels.

Market outlook

• The Dow may test lower supports near 20k next week ahead of the 1Q17 earnings reporting season and heightened geopolitical landscape. Meanwhile, investors are trying to get a handle on Trump’s fiscal and economic plans following his flip-flop remarks lately.

• For Bursa Malaysia, in tandem with the external jitters and lack of fresh impetus, KLCI is envisaged to remain in consolidation mode with key supports at 1705-1726. Although volatility remains, firmer Ringgit (vs US$) and oil prices will help to cushion any heavy selldown.

• Closed position (FIG4) : We took profit on PESONA (8.3% gain after hitting R2) and squared off PRTASCO (0.0% gain due to expiry), ENGTEX (2.4% loss due to expiry), HSL

(1.2% loss amid weakening technical) and DSONIC (3.8% loss amid weakening technical) yesterday

Source: Hong Leong Investment Bank Research - 14 Apr 2017