Market Review

• Asia markets ended mixed amid persistent selloff in energy shares following recent slump in oil prices. Sentiment was also dampened by profit taking activities in SHCOMP in the wake of MSCI’s decision late Tuesday to include China’s so-called A-shares in its emerging markets index as fresh worries about financials helped hit the brakes on the post-MSCI good feelings in Chinese stocks, sending them sliding in the last hour of trading. Dalian Wanda Group, owned by China's second richest man, Wang Jianlin, was in focus on Thursday as the shares and bonds of its units plunged.

• After falling about 16pts in three straight sessions, KLCI posted a 1.9-pt technical rebound to end at 1,777.4 after traded within a range of 3.6 pts between an intra-day high of 1,778.7 and a low of 1,775.1. Trading volume softened to 1.64bn shares worth RM1.80bn against Wednesday’s 1.69bn shares worth RM2.41bn in the absence of fresh market leads and an extended long holidays as Malaysian markets will be closed on 26 & 27 June for Hari Raya holidays.

• Wall St ended mixed after recent record highs in the early trades, lifted by the gains in the energy shares and health care stocks amid a rebound in oil prices and ahead of the unveiling of the Senate's health care bill. However, persistent profit taking saw the markets ended mixed as the Dow eased 12pts (despite rising 46 pts intraday) and S&P 500 dropped 1.1 pts while the Nasdaq rose 2.7 pts.

Technical View

Trading sideways above 50-d SMA

• Despite the mixed daily indicators that suggest further consolidation ahead, the key index has managed to build a temporary base above the 50-d SMA (now at 1768). Upside targets are situated near 1,785 (10-d SMA) and 1,800 (upper Bollinger band). On the flip side, a breakdown below 1,768 will accelerate further downward retracement towards 1,750-1,760 levels.

Market Outlook

• In the near term, the Dow is likely to trap in a range bound consolidation mode after hitting a series of record highs as investors refocus their attention on the upcoming July reporting season. Key resistances are 21,500-22,000 while supports fall on 21,000-21,100.

• Today, we expect the local bourse to mirror yesterday’s lackluster trading pattern amid lack of fresh market catalysts and ahead of the long Hari Raya holidays.

Source: Hong Leong Investment Bank Research - 23 Jun 2017