Market Review

• Key regional indices ended on a mixed note for another consecutive trading day as investors stayed sideline throughout the FOMC meeting, which drove the US Dollar index flattish near the 95 level. The Nikkei 225 and Shanghai Composite Index fell 0.10% and 0.21% respectively, while Hang Seng index ended flat.

• Stocks on the local front were mixed with negative bias despite the FBM KLCI gaining marginally by 0.08% to 1,763.34 pts. Market breadth was negative with 510 losers, 329 advancers, while 392 traded unchanged. Market traded volumes stood at 1.68bn. FBM ACE suffered a loss of 1.86%, but the technology sub-indices advanced 1.02%, in tandem with the trend from the overseas markets.

• US stock market trended higher as Caterpillar and McDonald’s advanced higher by 5.88% and 4.75% respectively after posting better-than-expected results, which lifted S&P500 into a record region at 2,477.08 pts (+0.29%). Meanwhile the Dow and Nasdaq gained 0.47% and 0.02% respectively.

Technical View

Mild rebound may be extended towards 1,770

• The FBM KLCI further continued its rebound for the time being towards 1,765. The MACD Line turned higher, but still below zero. The RSI and Stochastics trended slightly higher. We think the heavyweights should be able to lift the KLCI towards 1,770. Support will be set around 1,750.

Market Outlook

• In the US, corporate earnings have helped the recent uptrend movements on the Wall Street. Also, the recovery in Brent crude oil prices has lifted the energy stocks. Nevertheless, the on-going FOMC meeting may send mild cautious tone towards the trading environment.

• Tracking the positive overnight performance on the Wall Street, we opine that buying support may send stocks higher on the local front, the FBM KLCI should trend towards 1,770 led by oil and gas related heavyweights. Meanwhile, we may expect technical rebound within the small-to-mid cap stocks and lower liners after the recent profit taking activities.

Source: Hong Leong Investment Bank Research - 26 Jul 2017