Market Review

• Tracking the stronger performance on the Wall Street, Asian stock markets ended mostly higher amid a firmer dollar ahead of the corporate tax plan this week. Hang Seng Index and Shanghai Composite Index gained 0.48% and 0.29% respectively. However, Nikkei 225 was marginally lower after the released mixed bags of data.

• Tracking the overseas stock markets, the local bourse started on a positive note, but selling pressure remained intact and the FBM KLCI ended lower at 1,755.58 pts (-0.14%) led by banking stocks. Market volumes stayed slightly above 2.00bn mark at 2.02bn and market breadth was neutral with gainers slightly ahead of loser by a ratio of 1-to-1. Meanwhile, technology (+1.62%) and properties (+1.12%) sectors outperformed the market.

• US stock markets ended the quarter near the fresh records position, pushing the stocks to its eight straight winning quarters led by technology stocks ahead of the balance sheet unwinding process which will be starting in October. Meanwhile, the core personal consumption expenditures price index moderated to 1.3% in August (vs. 1.4% in July), which is still below the Fed’s preferred inflation measure target of 2%.

Technical View

FBM KLCI could rebound amid daily oversold signal

• The key index ended lower for the ninth consecutive day. The MACD Indicators extended the negative momentum. Both the RSI and Stochastics oscillators, however are oversold – indicating that the KLCI could be due for a technical rebound. Should there be a breakout above 1,760, next target will be located around 1,770-1,780. Meanwhile, support will be pegged around 1,750.

Market Outlook

• The US stock markets could sustain its momentum for the time being in the anticipation of further details on the corporate tax reform to be revealed by Trump this Wednesday. Also, investors could be focusing on comments by Janet Yellen and Mario Draghi, US jobs data and U.K. PMI throughout the week.

• Meanwhile, the KLCI could be due for a rebound amid oversold signals on RSI and Stochastics oscillators. Investors may want to position themselves within potential trading opportunities ahead of the 2018 Budget.

Source: Hong Leong Investment Bank Research - 2 Oct 2017