Market Review

• Ahead of the French presidential election, coupled with the geopolitical tension in the Korea region, the Asian stock markets were largely lower led by Shanghai Composite Index (-0.81%) and Hang Seng Index (-0.41%), while Nikkei 225 traded marginally higher by 0.07% to 18,432.20 pts.

• The FBM KLCI traded within a narrow range of 1,735- 1,742 levels before ending marginally lower by 0.09% to 1,738.95 pts led by selling pressure on Petronas Gas and Westports. On the broader market, selling interest emerged and market breadth turned negative with 661 decliners, 258 advancers, while 347 traded unchanged. Market volumes stood at 2.85bn.

• Despite Morgan Stanley reported better-than-expected result, Wall Street took a mild beating led by IBM, which posted weaker results and a slump in Brent crude oil prices dragged energy shares lower. The Dow declined 0.58% to 20,404.49 pts, breaching the support of 20,500.

Technical View

The FBM KLCI Faced Resistance Near 1,740, Indicators Are Turning Flattish

• The MACD Line is flattish above the zero level, while the MACD Histogram extended another green bar. We may expect the key index to trend on a sideways mode over the near term with the upside capped around 1,740- 1,743. Support will be pegged around 1,730.

Market Outlook

• We think market will remain volatile as external factors such as crude oil, French and UK's election could play an important role influencing the trading interest of the market participants. As the Dow has violated 20,500, next support will be located around 20,000.

• Meanwhile, we opine that the shares on local front are likely to remain cautious amid negative sentiments on Wall Street. Hence, the FBM KLCI is likely to trend within the range of 1,730 - 1,743 over the near term. Also, selling pressure could be seen within oil and gas stocks after a slump in Brent oil price.

Source: Hong Leong Investment Bank Research - 20 Apr 2017