Market Review

• Tracking the firmer trend on the overseas markets amid subsiding concerns over hurricane Irma and North Korea geopolitical tensions, Asian key indices followed suit and trended higher led by Nikkei 225 advancing 1.18% as US dollar was steadier against Japanese yen, while Hang Seng and Shanghai Composite Index added marginally by 0.06% and 0.11% respectively.

• On the local front, trading activities were seen focused on small caps and lower liners under the ACE market, while the FBM KLCI closed higher by 0.40% at the end of the trading session as buying support emerged on Petronas Gas and IHH. Overall market volumes stood at 3.66bn shares traded, highest volumes in 3 months. Also, market breadth was positive with 488 gainers vs 395 losers.

• U.S. stock markets extended gains for the third consecutive days, while S&P500 ended at a record high as comments from Treasury Secretary Steven Mnuchin regarding a backdating of the tax cut to the start to give a boost to the US economy led financial stocks higher. Also, jobs opening in July improved to 6.2m vs expectations of 5.96m. The Dow added 0.28%, while S&P500 rose 0.34%, trading near the 2,500 psychological level.

Technical View

Regaining the territory above 1,780

• Generally, the technical indicators are suggesting that the uptrend is resuming as the FBM KLCI stayed above 1,780. With the RSI and Stochastics trending positively above zero, the short term upward momentum could be intact and the key index may revisit the resistance zone near the 1,795 level. Meanwhile, support will be located around 1,775-1,780

Market Outlook

• As of now, the US equities may trend higher amid the positive buying momentum, but investors may focus on US inflation data, which may offer fresh direction for the US dollar index that have weakened towards near the 92 level (32-month low) and crude oil stockpiles this week. Meanwhile, traders may stay slightly cautious ahead of the FOMC meeting that will be held next week (19-20 Sept).

• On the local front, we believe the trading activities may remain active and robust on the back of the positive inflows of foreign funds and the buying momentum may lift the key index higher towards the resistance along 1,795. Traders may look out for trading opportunities within the solid fundamental small caps and lower liners as trading volumes have seen increasing among them.

Source: Hong Leong Investment Bank Research - 13 Sept 2017