Market Review

• Asian stock markets trended mixed after China’s economic data were mostly within expectations, coupled with softer crude oil prices following the API reports. The Shanghai Composite Index dropped 0.74%, while the Hang Seng Index (+0.09%) and Nikkei 225 (-0.08%) ended flat.

• Tracking the rebound on Wall Street, share prices of stocks under Bursa Malaysia noted some recovery and the FBM KLCI surged above 1,790 at 1,792.35 pts (+0.44%). Market breadth turned positive with 483-to- 381, while overall traded volumes stood at 1.95bn. Also, semiconductor related stocks ended with a mild technical rebound.

• With the widely anticipated interest rate hike delivered by the Fed despite a softer inflation data, US equities were mostly lower with S&P500 and Nasdaq falling 0.1% and 0.41% respectively, but the Dow managed to gain 0.22% on higher banking stock prices.

Technical View

MACD Indicator turned slightly bullish

• The FBM KLCI ended with a bullish candle just below the resistance zone of 1,790-1,800. The MACD Indicator has turned bullish. However, we expect the RSI oscillators to show overbought signal and investors may turn cautious near the zone, should the key index revisit 1,800 level. Meanwhile, support will be pegged around 1,760 level.

Market Outlook

• In the US, we opine that buying sentiment will be capped for the moment amid a more hawkish tone from the Federal Reserve and they remained the outlook of total three rate hikes for 2017, coupled with the unwinding process of bond this year.

• Meanwhile, shares on Bursa Malaysia may take a breather amid the negative tone on Wall Street, coupled with weaker crude oil prices after the surprise build in inventories. The FBM KLCI's upside could be limited around 1,790-1,800.

• Closed positions. Yesterday, we took profits on GENM (4.1% gain) after hitting our R2 upside target in one day. We also squared off our positions in REXIT (7.1% gain) and TALIWRK (4.7% gain).

Source: Hong Leong Investment Bank Research - 15 Jun 2017