Market review

• Asian stock markets ended mostly higher, tracking the gains on the Wall Street, coupled with the upbeat jobs data last week. The Nikkei 225 and Hang Seng Index rose 0.76% and 0.63% respectively – the later surged higher amid few corporate developments from Wanda Hotel Development-Sunac and Orient Overseas International-Cosco Shipping Holdings.

• Meanwhile, shares on the local front were mostly lower as selling pressure picked up on the broader market, the FBM KLCI continued to end below 1,760 at 1,757.13 pts (-0.16%). Market breadth was negative with 556 decliners, 294 advancers, while 351 traded unchanged. Market volumes stood at 1.67bn, worth RM1.52bn. Nevertheless, FBM ACE managed to buck the trend to close 0.74% higher.

• US stocks markets ended on a mixed note ahead of the corporate earnings season, as investors were on a sideline mode. Healthcare stocks were under pressure with the uncertainties piling up on Trump's healthcare bill reform. The Dow (-0.03%) and S&P500 (+0.09%) ended flattish, but the Nasdaq gained 0.38%.

Technical view

Daily MACD Indicator hovering below zero, while momentum oscillators trended lower

• The FBM KLCI stayed below the 1,760 level and the MACD Indicator is hovering in the negative zone, as selling pressure heightened after the key index violated below its support level. The momentum oscillators such as RSI is trending lower, but the Stochastics oscillator is in the oversold region, suggesting that the key index may be due for a technical rebound.

Market outlook

• In the US, traders could continue with a cautious tone of trading as Janet Yellen will be testifying in front of the Congress on Wednesday and Thursday, which may suggest some clues on the interest rates hike tone.

• Meanwhile, on the local bourse, selected shares may be due for a technical rebound after the FBM KLCI breached below the 1,760 level for the second consecutive day, coupled with an oversold signal from the momentum indicator. Also, trading opportunity could be observed in the ACE market and technology stocks as Nasdaq bucked the broader trend yesterday

Source: Hong Leong Investment Bank Research - 11 Jul 2017