Market Review

• Asian key benchmark indices ended on a mixed note with traders focusing on US dollar trend ahead of the two-day FOMC meeting on 25th-26th July. Also, political uncertainty has contributed to the weaker US dollar below the 95 level. The Nikkei 225 fell 0.62%, but Shanghai Composite and Hang Seng Index rose 0.39% and 0.53% respectively.

• Meanwhile, Malaysia's stock market rose marginally above the 1,760 level at 1,761.99 pts (+0.16%) after two weeks of sideways consolidation between the 1,750- 1,760 level. Market breadth, however turned negative with 516 losers vs 314 gainers. Overall market volumes were below 1.67bn, worth RM1.68bn.

• Wall Street ended on a mixed note as investors digested a mixed bag of economic data ahead of the FOMC meeting; both the Dow and S&P slipped 0.31% and 0.11% respectively, but Nasdaq managed to surge to record high prior to Alphabet's result.

Technical View

Slight breakout above 1,760

• The FBM KLCI has breached above 1,760. The MACD Indicator has formed a "buy" signal with the MACD Line crossing above Signal Line. The RSI and Stochastics oscillators have gradually trend higher. The FBM KLCI may trend towards 1,770-1,775, while the support will be pegged around 1,750.

Market Outlook

• We expect trading tone in the market environment to be cautious with the FOMC meeting over the next two trading days, coupled with the on-going corporate reporting season. We expect the Dow to be hovering within 21,400-21,800.

• Meanwhile, shares on the local front could trend fairly positive as the FBM KLCI managed to surpass the 1,760 level after a 10-day consolidation phase. Also, selected technology stocks within the ACE market may still outperform the market amid the better sentiments from the overnight Nasdaq move.

• Closed positions: We had squared off our positions in JAKS (2.7% gain) and MAXIS (0.7% loss amid expiry) yesterday.

Source: Hong Leong Investment Bank Research - 25 Jul 2017