Market Review

• After digesting the FOMC meeting minutes, coupled with weaker crude oil prices and mixed performance in the US, most of the Asian stock markets ended in softer tone. The Nikkei 225 and Hang Seng Index fell 0.44% and 0.22% respectively, but Shanghai Composite Index increased 0.17%.

• Again, the FBM KLCI was traded most of the time in the negative territory before a last minute buying support to lift the key index at 1,770.53 pts (+0.13%). However, on the broader market, market breadth was negative with decliners outpacing advancers by a ratio of 511-to-359. Market traded volumes stood at 1.55bn.

• US stock markets ended in a negative tone led by tech and energy stocks selloffs, coupled with the disappointing jobs data, where private sector payrolls increased at a slower pace and jobless claims were higher-than expected.

Technical View

Still indecisive mode between the range of 1,760- 1,770

• As the FBM KLCI ended marginally higher at 1,770, short term trend has turned mildly positive. The MACD Histogram extended another green bar, while the stochastics rebounded higher. Immediate resistance will be envisaged around 1,775-1,780. Meanwhile, support will be located around 1,750-1,760.

Market Outlook

• The recent disappointment in labour market data dampened the earlier positive tone in the stock market and traders may have taken the indicator of economic growth moderation as a reason to take profit on equities. Also, Donald Trump's 'ready to use force' statement against North Korea may weigh further on Wall Street.

• Following the negative performance on Wall Street, profit taking activities may emerge and it may curtail the upside of the FBM KLCI around 1,775-1,780. Should there be a violation below 1,760, next support will be set around 1,750.

• Closed position: We had closed our position on SCABLE (1.8% gain) amid expiry yesterday.

• Please refer to our Retail Research report entitled 3Q17 Quarterly Retail Strategy for recommendations for 3Q after tapering of trading momentum in 2Q.

Source: Hong Leong Investment Bank Research - 7 Jul 2017