Market review

• Asian key benchmark indices ended mostly in the positive territory despite the rising geopolitical tensions after North Korea managed to launch a missile over the weekend. The Hang Seng Index and Shanghai Composite Index added 0.86% and 0.22%, while Nikkei 225 was marginally lower by 0.07%.

• The Malaysia’s stock market ended marginally higher after some positive developments with China key corporate figures. The market breadth, however was negative with losers led gainers by a ratio of 5-to-4. Market volumes stood at 3.74bn shares, which valued at RM3.00bn. Nevertheless, selected stocks under the property sector were back in focus after Bandar Malaysia news resurfaced in the media.

• Stocks on the US markets ended on a positive tone led by a strong recovery in crude oil prices, coupled with a surge in internet security stocks amid cyberattacks last Friday. The Dow added 0.41%, while S&P500 and Nasdaq advanced 0.48% and 0.46% to mark their record highs respectively.

Technical view

Retesting 1,780 with a potential breakout amid positive technicals

• As the FBM KLCI steadied above the 10-D SMA, coupled with the MACD Histogram extending another green bar, we expect near term momentum to be positive. Meanwhile, the RSI are hooking upwards, but the Stochastics oscillator is getting into the overbought region. Should the FBM KLCI breakout above 1,780, next resistance will be envisaged around 1,800. Support will be set along 1,760.

Market outlook

• In the US, we think that the broader market could trade on a positive bias view over the near term after the recovery in crude oil prices. We expect any negative sentiment in the market environment should be cushioned well. Given the setup on the charts, the Dow may revisit the 21,000-21,178 levels after the recent consolidation phase between the 20,777-21,000 levels.

• Back in our local front, the FBM KLCI may retest the 1,780 level as Brent oil surged nearly 2% above the US$50 mark, is likely to boost the market sentiments. In our view, traders may lookout for opportunities within the oil and gas segment. Besides, selected property developers may experience further buying interest after PM’s discussion with key figures in China.

• Closed position (FIG4): We squared off our position on CCK (28.5% gain) yesterday amid expiry.

Source: Hong Leong Investment Bank Research - 16 May 2017