Market Review

• Asian stock markets ended mostly lower after the political jittery in the US weakened investors' trading sentiments and US dollar index was staying around the range of 93 in the early trading hours. The Nikkei 225 and Shanghai Composite Index fell 0.38% and 0.35% respectively, while Hang Seng Index added 0.12%.

• On the local front, trading tone remained subdued as the market volumes dwindled to 1.42bn shares traded, worth RM1.47bn and market breadth was negative with 432 decliners vs 368 gainers. The FBM KLCI, however managed to inch marginally higher by 0.15% to 1,774.53 pts led by banking stocks like Hong Leong Bank and Public Bank. Also, technology and ACE market stocks were traded actively.

• Meanwhile, stocks on Wall Street managed to surge positively amid the better-than-expected jobs report, which the US economy added 209k jobs last month and the unemployment rate declined to 4.3%, contributing to the recovery of US dollar index above 93. The Dow advanced 0.29% to mark a fresh record high.

Technical View

Technical indicators pointing upwards

• The FBM KLCI managed to creep higher over the past week above the 1,770 level. The MACD Line has crossed above zero, which the KLCI may trend higher this week. Also, the RSI has continued to trend positively above 50, suggesting the momentum is positive. The upward resistance will be pegged around 1,785. Meanwhile, support will be located around 1,765.

Market Outlook

• In the US, the recent uptrend has been supported by the jobs data and better-than-expected reporting season by selected heavyweights. However, with the toppish indicators on the Dow, we think that the trading sentiments may slowdown as profit taking could emerge over the near term. The Dow is likely to hover within the range 21,800-22,200.

• Meanwhile, trading tone on the local front may still favour towards big cap stocks and the FBM KLCI could be lifted gradually to 1,775-1,780 amid selective buying interest among index heavyweights. Also, on the traders’ radar, stocks on technology and ACE market stocks related to data storage may be anticipating some short term trading activities in tandem with the movement of the tech giants on Wall Street.

Source: Hong Leong Investment Bank Research - 7 Aug 2017