Market review

• Key regional indices closed on a mixed note following the resumptions of China stock markets as the Caixin services PMI grew at a softer pace in September. The Shanghai Composite Index rose 0.77% respectively, while Hang Seng Index fell 0.46%.

• After a lackluster trade on the FBM KLCI, key index ended marginally higher led by selected index heavyweights like Genting Malaysia. Also, market breadth turned slightly positive with advancers ahead of decliners by 430-to-401 stocks. Overall traded volumes surged towards 2.83bn (+30.4% vs 100day average volumes). Industrial products gained traction as steel and gloves related stocks traded positively.

• US stock markets were mildly lower ahead of the corporate earnings this month as Investors locked in profits after a long stretch of rally over the past two weeks. The Dow and S&P 500 fell 0.06% and 0.18% respectively. Meanwhile, crude oil prices ended steadier amid comments from OPEC to potentially take further action for restoring market balance over the long run.

Technical view

KLCI to re-visit the resistance around 1,770

• The FBM KLCI advanced higher for the second consecutive day, forming another green bar on MACD Histogram. Meanwhile, the Stochastics and RSI oscillators are turning slightly positive after rising above the oversold regions. The next resistance is located around 1,770, while support is located around 1,755.

Market outlook

• Following the weaker jobs data last week, we think the US equities may extend its profit taking activities over the near term as investors may monitor the upcoming results season. Nevertheless, technical indicators are still suggesting that uptrend move is intact on the major indexes at this juncture.

• Meanwhile, on the local front, without any fresh catalyst, the recovery on the FBM KLCI is likely to be subdued and the upside of the key index may be capped along 1,770- 1,775. However, stocks within the construction sector could remain active with the potential of more LRT3 jobs to be dished out in the near term.

Source: Hong Leong Investment Bank Research - 10 Oct 2017