Market Review

• During the Christmas trading session, Japan and China exchanges traded on a lacklustre mode as most investors were off for the long weekend and most of the exchanges were closed. Japan Nikkei 225 gained 0.16%, but Shanghai Composite Index decreased 0.50%.

• On the local front, the FBM KLCI finished on a positive note on the back of a last minute buying support among index heavyweights such as Genting and Genting Malaysia, lifting the key index higher at 1,760.24 pts (+0.52%). However, market breadth was negative with 442 decliners vs 400 advancers. Market traded volumes stood at 1.64bn for the day, which is slightly softer amid the long weekend break.

• US equities took a slight dip before heading into the long holiday weekend as profit taking activities emerged among selected heavyweights like Nike. Investors were slowing down the pace of trading ahead of Christmas. The Dow and S&P500 slid 0.11% and 0.05%, respectively.

Technical View

Surpassed SMA200, technicals positive

• On the weekly chart, FBM KLCI managed to form a bullish engulfing bar above the weekly SMA20, coupled with the recovering weekly RSI and MACD Line, suggesting that the upward move is intact. Meanwhile, after forming a flag breakout last week on the key index, the KLCI stayed above the daily SMA200 and retested 1,760. Should there be a breakout above 1,760, next resistance will be located around 1,770-1,780. On the other hand, if the KLCI violates below 1,750, next support will be pegged around 1,740.

Market Outlook

• In the US, we think the trading interest could turn softer throughout the final week of the year and market sentiments are likely to stay subdue with investors staying aside for the shortened trading week. Nevertheless , the Dow is likely to end the year without a single declining month for 2017.

• Meanwhile, on the local front, selected index heavyweights may stay positive on the back of window dressing activities, which may eventually lift the key index higher. Also, we believe that with the Brent crude oil staying above US$65 last week, oil and gas sector is likely to trade on a more positive tone.

Source: Hong Leong Investment Bank Research - 26 Dec 2017