Market Review

• In holiday-thinned trading with most markets including Hong Kong, Australia and New Zealand exchanges remain closed yesterday, the MSCI Asia Pac (MXAP) index eased 0.4-pt to 172.3 after rallying to a 52-week high at 173.4 on 25 Dec.

• After staging a relief rally from 9M low of 1708 (5 Dec) to a high of 1760.5 (26 Dec), KLCI moderated 0.25-pt on profit taking, tracking the lackluster regional markets. Market breadth was negative with 387 gainers against 489 losers as sentiment stayed cautious with market players sidelined ahead of the year-end holidays.

• Led by a slide in Apple share prices, the Dow declined as much as 45 pts on a report of soft iPhone X demands, more than offset post-holiday gains in the retail sector and energy shares after a surge in crude-oil futures that took the commodity to a 2½-year high. Trading volume was thin in a holiday shortened stretch, the Dow traded down 7.9 pts to 24746.

Technical View

Sideways with an upside bias

• We remain cautiously optimistic of KLCI near term outlook, as the index continues to stay above 200d SMA (1756) support to boost upside momentum, challenging stronger hurdles at 1766 (upper Bollinger band), 1773 (76.4% FR) and 1800 territory. On the flipside, a decisive fall below 1756 and 1748 (10d SMA) supports could weaken ongoing rally and trigger more downside towards 1740 (38.2% FR) levels.

Market Outlook

• On Wall Street, 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, ongoing rally will continue (unless support trendline near 24k-24.2k is broken) in anticipation fiscal stimulus, corporate spending and additional stimulus measures by the government.

• Meanwhile, on the local front, selected index heavyweights may stay positive, underpinned by ringgit appreciation bias and oil price strength coupled with the window dressing activities. Also, we believe that with the Brent crude oil closed on a bullish tone overnight, oil and gas counters such as ARMADA and SAPNRG are likely to garner trading interests

Source: Hong Leong Investment Bank Research - 27 Dec 2017