Market Review

• Asian stock markets ended on a mixed note, despite the rebound on tech giants on Wall Street. Investors were trading on a cautious note ahead of the some developments on the tax reform bill. Hang Seng Index and Nikkei 225 rebounded higher by 0.28% and 1.45% respectively led by automakers and tech stocks, while Shanghai Composite Index down 0.27%.

• With the positive inflows of foreign funds, the FBM KLCI stayed in the positive territory for the trading session; suggesting that the buying support is picking up. Also, technology stocks gained traction as the technology sub index rebound 1.39% after the positive performance on the overnight Nasdaq. Market breadth, however was negative with decliners leading advancers by a ratio of 455-to-388. Market traded volumes stood at 1.80bn, worth RM2.51bn.

• Wall Street gained traction for another session supported by the tech giants rebound led by Facebook, Apple Inc and Alphabet. The Dow and Nasdaq rose 0.29% and 0.54% respectively. Also, energy shares were being traded higher after mild recovery in crude oil prices.

Technical View

Steady price action to retest 1,730-1,740

• The FBM KLCI traded marginally higher into the positive region and the MACD Line and Histogram continues to trend higher. Meanwhile, the RSI and Stochastics oscillators are pointing for a recovery and we expect the downside for the key index is limited. Following the bullish engulfing bar formed on Tuesday, we anticipate the technical rebound to sustain towards the 1,730-1,740 levels. Support will be anchored along 1,700-1,710.

Market Outlook

• In the US, investors were optimistic on the progress of the tax reform bill, where a final bill would reach President Trump for approval before end of 2017 and this will provide a healthy buying support towards the stock markets over the near term. The Dow and Nasdaq could retest the 24,500 and 6,900 levels.

• Meanwhile, on the local front, the weaker market sentiments over the past two weeks, where most of the small cap and lower liners were being beaten down may recover, tracking the positive performance on the Wall Street and the rebound in technology giants, coupled with the year-end window dressing activities. Also, oil and gas stocks are likely to regain momentum with the help of the recovering crude oil prices above the US$62 mark.

Source: Hong Leong Investment Bank Research - 8 Dec 2017