Market Review

• Despite Wall Street ended on a bullish tone, with the Dow marking all-time-high yesterday, regional stock markets closed mixed as investors focus on the potential inclusion of China’s stocks into MSCI emerging markets index. The Shanghai Composite Index fell 0.13%, while Hang Seng Index slipped 0.31%, but the Nikkei 225 rose 0.81%.

• Similarly, shares on the local bourse ended on a weaker tone as the FBM KLCI slid 0.46% to 1,780.71 pts. Overall market breadth was negative with 544 decliners, 311 advancers, while 390 traded unchanged. However, only the technology index bucked the market trend by surging 0.74% yesterday led by Vitrox (+3.9%) and Inari (+1.5%). Market traded volumes were lower at 1.81bn vs 1.93bn on Monday.

• Sentiments on Wall Street were pulled down by energy shares as the oil slump further within the negative territory as two OPEC members were exempted from the production cutting deal. Also, investors were concerned about the Fed's future interest rates outlook after few Fed officials given contradictory statements.

Technical View

MACD Line and Stochastics oscillator are weakening

• The FBM KLCI rejected the 1,800 level and has fallen below the immediate support of 1,787. Also, the MACD Indicator has issued a “Sell” signal, while both the RSI and Stochastics oscillators are hooking downwards.

Market Outlook

• Despite the short term weakness attributed to the softer crude oil prices, we expect the trend in the U.S. stock markets to maintain a positive gradual uptrend towards the 21,800 level with the re-emergence of buying support on technology stocks.

• Meanwhile, share prices on Bursa Malaysia would see continuation of profit taking activities across the board with the weaker crude oil price. Traders may deploy selling-into-strength strategy with the spillover of negative sentiments from the overseas markets. The FBM KLCI's upside is likely to be pegged around 1,800, while the support will be located around 1,780, followed by 1,760.

Source: Hong Leong Investment Bank Research - 21 Jun 2017