Market Review

• Asian stock markets suffer another round of selling pressure after a healthy recovery since early Feb as disappointment emerged on the back of weaker-than expected Chinese manufacturing data, coupled with the hawkish statement from Fed Powell's testimony. Hang Seng Index dropped 1.36%, while Nikkei 225 plunged 1.44% on the back of firmer yen.

• Similarly, selling pressure emerged and heavyweights on the local front were being sold down, resulting in the softer FBM KLCI (-0.82%). On the broader market, losers overwhelmed gainers with a ratio of 3-to-1. Market volumes traded near the 3.0bn mark at 2.95bn, worth RM3.64bn.

• Wall Street continued its second consecutive day of losses, reversing earlier gains on the back of ongoing concerns of faster pace of rate hike. The Dow dived another 1.50%, snapping the 10-month winning streak.

Technical View

Positive technials, upward trend remains intact

• With the bearish engulfing bar formed on the KLCI, it viewed as the second time rejecting the 1,870-1,880 levels and could perform a mild retracement as Stochastics are showing overbought signal. However, the MACD line is hovering above signal line, which may be seen as upward trend. Hence, the downside is likely to be limited around 1,840.

Market Outlook

• In the US, the heightened volatility may persist as traders will be watching Fed's favourite inflation measure, the core PCE index this coming Thursday. Should the data come above consensus, it may fuel the expectations of rate hikes.

• The negative sentiment could further intensify the selling pressure on regional stock markets and Bursa Malaysia, eventually. Traders may reassess their portfolio holdings as the reporting season has ended. Meanwhile, KLCI's upside may be capped along 1,870-1,880.

• Closed position: Yesterday, we closed our position in DESTINI (7.1% loss) after hitting stop loss levels and squared off ORNA (15.9% gain) and FITTERS (1.2% loss) due to expiry.

Source: Hong Leong Investment Bank Research - 1 Mar 2018