Market review

• Asian regional markets ended higher with the help of spillover buying interest from Wall Street. Hang Seng Index and Shanghai Composite Index rose 0.73% and 0.29%, respectively. Meanwhile, markets in China and South Korea were closed for holidays.

• Overall market sentiments were more positive on Bursa Malaysia as the FBM KLCI closed in the positive territory led by CIMB and Genting Berhad, but construction and property sub-indices ended marginally lower. Market traded volumes were around 2.25bn, worth RM1.83bn. Market breadth stayed positive with advancers slightly ahead of decliners by 454-to-393 stocks.

• The US stock markets made another round of new highs as most of the economic data across the world were better-than-expected. IHS Markit PMI for the euro zone added 1.0 pts MoM to 56.7 in September, while the ISM's non-manufacturing index PMI rose 4.5 pts MoM to 59.8 in September (highest reading since August 2005). Also, US private employers added 135,000 jobs in September, compared to the expectations of 125,000.

Technical view

Technical rebound formation intact

• The FBM KLCI managed to recover higher for another day and the MACD Histogram extended another green bar. The RSI and Stochastics oscillators are on the recovery mode out of the oversold region. We may anticipate the FBM KLCI to trend higher towards 1,770- 1,775. Meanwhile, support will be pegged around 1,750- 1,755.

Market outlook

• With the releasing of upbeat economic data, coupled with the optimism regarding the Trump's corporate tax reform, we think the upward trend is likely to sustain over the near term. The Dow may trade higher towards 22,800 zone in near term. Meanwhile, investors may pay close attention to comments from a few of the Fed’s officials this week to search for clues on the interest rates hike decision.

• On the local front, we think market may stay on a consolidation phase as foreign participation ended with another day of outflow yesterday. Also, with the absence of fresh catalyst, the FBM KLCI could be capped near the 1,770-1,775 levels. Nevertheless, traders may focus on selected technology-related lower liners as buying support was noticed among stocks like VIS and AEMULUS.

Source: Hong Leong Investment Bank Research - 5 Oct 2017