Market Review

• As the Wall Street rallied after the better-than-expected jobs data, Asian stock markets followed suit with Nikkei 225 and Hang Seng Index advancing 1.65% and 1.93%, respectively, while Shanghai Composite Index rose 0.58%. Steel related companies across Asia were also focused as Donald Trump commented that he was working with Australian PM to ensure that Australia would not face US steel and aluminium tariffs.

• Equities on the local front staged a bullish rebound and the FBM KLCI (+0.94%, 1,861.22 pts) turned positive for the second consecutive days. Market breadth was positive with gainers led losers by a ratio of 3-to-2. Overall market traded volumes stood at 2.47bn, worth RM2.40bn. Topping the gainers list include Nestle, Hartalega and F&N.

• Wall Street closed firmly lower led by industrials stocks after Trump signed the US import tariffs last week, which may lead to higher pressure on cost structure and potentially lowering down sales for companies like Boeing and Caterpillar, eventually. Traders were traded cautiously ahead of the inflation data, the Dow declined 0.62%, but Nasdaq rose 0.36%.

Technical View

Uptrend intact, next target at 1,872

• The FBM KLCI managed to recover for the second consecutive days, surpassing the 1,860 level. The MACD Histogram extended another green bar. The RSI and Stochastics oscillators are trending higher. With the recovering technicals, we believe the uptrend is intact and the key index may retest the 1,872 level, followed by 1,896 over the longer term.

Market Outlook

• In the US, investors could be focusing on few major events over the near term such as FOMC meeting (20-21 Mar), interview of potential candidate of Trump's new NEC advisor and fresh developments on US import tariffs. Hence, the Dow could fluctuate within a tight range around 25,000, with the resistance envisaged around 25,500.

• Meanwhile, with the mild pullback on Wall Street, traders may take the opportunity to take profit after a strong rally yesterday. Also, steel producers on the local front may succumbed to selling pressure, while market participants could turn slightly cautious on the broader market ahead of the dissolution of parliament and the upcoming GE14.

Source: Hong Leong Investment Bank Research - 13 Mar 2018