Market Review

• Bargain hunting activities emerged across the regional benchmark indices following the new progress in the metal tariffs by the US. The Nikkei 225 and Hang Seng Index jumped 0.54% and 1.52%, respectively, while Shanghai Composite Index rose 0.54% on the back of better-than-expected trade data.

• In tandem with the positive Asian equities, stocks on the local front were marginally higher as the FBM KLCI inched marginally higher by 0.09% to 1,839.62 pts. On the broader market, there were 475 gainers vs. 431 losers. Profit taking activities emerged as traders were adopting a cautious approach in the midst of uncertain market environments. However, consumer stocks were among the top gainers on the back of their defensive nature.

• Wall Street recovered from its intraday losses and ended green for the session as import tariffs concerns eased following the fresh developments that Canada and Mexico may exempt from tariffs on steel and aluminium. The Dow and S&P500 crept higher by 0.38% and 0.45%, respectively.

Technical View

Technicals remain weak, upside limited

• The FBM KLCI retested 1,846 and ended below 1,840. The MACD Line is still hovering below the Signal Line with a negative Histogram. Meanwhile, oscillators like RSI and Stochastics are softening below 50. Hence, with the negative technicals, any rebound would be short-lived and KLCI's resistance will be envisaged around 1,860.

Market Outlook

• In the US, the jobless claims were more than expected and investors could be focusing on the nonfarm payroll data that will be released later today. The data could affect the tone of the FOMC meeting, resulting in a potential shift on the interest rate outlook, eventually.

• Meanwhile, sentiment was getting better and we are expecting the KLCI to recover in tandem with the spillover effect from Wall Street. However, O&G stocks may see some selling pressure after Brent crude oil ended lower. With the uncertain outcome of Trump's tariffs decision, we think the upside could be limited around 1,860 as investors could be adopting a cautious stance over the near term.

Source: Hong Leong Investment Bank Research - 9 Mar 2018