Market Review

• Asian key regional indices ended on mixed note as investors were trading on a cautious tone prior to the trio events (UK election, ECB meeting and James Comey’s testimony); the Nikkei 225 fell 0.38%, while Shanghai Composite Index and Hang Seng Index rose 0.34% respectively.

• Similarly, sentiments on the local front were neutral as the FBM KLCI fluctuated around the 1,785 level and ended marginally lower at 1,785.57 pts (-0.02%). Market breadth was negative with losers (459) slightly ahead of gainers (419). However, buying interest were seen within semiconductor and gloves sectors – the latter advanced as input cost such as rubber prices declined over the past month.

• Soon after James Comey's testimony was released, stock market in the US had a relief rally and the Dow marked another intraday record high of 21,264.89 pts before ending only marginally higher by 0.04% at 21,182.35 pts as the outcome of the testimony was within investors' expectation.

Technical View

FBM KLCI turned flattish and MACD Histogram turned red

• The key index continued to form smallish candles over the past few trading days near the 1,790 level – indicating an indecisive tone prior to the key events. With the MACD Histogram extending another red bar, the key index’s upside could be c apped around 1,800. Should there be a violation of support at 1,780, next support will be set around 1,760.

Market Outlook

• Market sentiments were fairly muted over the key events this week and we opine that the consolidation phase may extend ahead of the FOMC meeting (13-14 June) next week. The Dow's could trend sideways between the 21,000-21,200 levels.

• Meanwhile, shares on Bursa Malaysia may trade on a weaker tone amid softer Brent crude oil price, which rejected the US$50/barrel mark. The FBM KLCI's support will be located around 1,760. Nevertheless, we think the trading focus will stay within the gloves, semiconductor and steel sectors as volumes have picked up among these industries.

Source: Hong Leong Investment Bank Research - 9 Jun 2017