Market Review

• Most of the Asian stock markets ended on negative tone on the back of the global trade-related concerns, coupled with the selected White House reshuffling. The Nikkei 225 and Shanghai Composite Index declined 0.58% and 0.63%, respectively, while Hang Seng Index slipped 0.12%.

• Tracking the regional performances, stocks on the local front ended on a flattish tone (FBM KLCI: 1,846.39 pts, +0.06%). On the broader market there were 388 gainers and 504 losers. Meanwhile, selected export-oriented stocks like MPI, VS and Hartalega managed to top the gainers list. Overall market traded volume stood at 2.88bn (RM4.26bn).

• Wall Street was green on last Friday's session but was traded lower for the week as President Trump's decision on the import tariffs steel and aluminium and political uncertainty in Washington has caught investors by surprise and volatility heightened in the stock markets. The Dow and S&P500 rose 0.29% and 0.17%, respectively.

Technical View

Softer RSI and Stochastics oscillators

• The FBM KLCI ended lower for the week in tandem with the regional performances. The MACD Histogram extended another red bar, while the RSI and Stochastics oscillators have weakened for the week. We expect the key index to stay sideways over the near term with the key index's upside to be capped around the 1,860 level. On the flip side, the support will be anchored around 1,835.

Market Outlook

• As President Trump’s protectionist measure over the past weeks could trigger a potential trade war, we opine that Wall Street may trend sideways. Moreover, investors could also take a wait-and-see stance ahead of the FOMC meeting, which may provide an outlook on the interest rate for the rest of the year. The Dow may range between 24,500-25,500.

• With the cautious external market setup environment continues to mount pressure on regional performance and local bourse, coupled with a few major events such as dissolution of parliament and the GE14, we believe traders may extend their sidelines view on the market and deploying a selling-into-strength strategy over the near term.

Source: Hong Leong Investment Bank Research - 19 Mar 2018