Market Review

• Asian equities ended mixed as investors were awaiting the conclusion of the two-day FOMC meeting. Also, tracking the negative overnight performance on the Dow, the Nikkei 225 declined 0.47%. However, Hang Seng Index and Shanghai Composite Index rose 0.11% and 0.42%, respectively.

• Despite the Asian stock markets ending mixed, the FBM KLCI managed to close in a positive region led by last minute buying support on selected heavyweights like Public Bank and IHH. On the broader market, market breadth was negative with 657 decliners, 284 gainers, while 373 traded unchanged. Topping the gainers and actives list was Media Chinese International as investors viewed the potential arbitrage opportunity between its dual-listed entities in Hong Kong and Malaysia.

• Wall Street rebounded off the support around 24,500 led by industrial and energy stocks - the latter performed positively amid the Brent crude oil recovery (hit 3-week high above US$67). The Dow rose 0.47%, while S&P500 added 0.15%.

Technical View

Technical indicators are recovering mildly

• After a good last minute buying support on heavyweights, the FBM KLCI closed above the short term moving average, resulting in a positive MACD Histogram. Both the momentum oscillators are recovering, suggesting a potential upward move towards the resistance of 1,860. Meanwhile, support will be pegged around 1,840.

Market Outlook

• In the US, the Dow may trend sideways between 24,500- 2,6000 as investors will be waiting for the first news conference by Fed's Chair Jerome Powell after the two day FOMC meeting to gauge the tone of the interest rate outlook in 2018. Also, the potential increase in regulations on internet platforms may put pressure on tech heavyweights over the near term.

• On the local front, traders are likely to stay sidelines on small cap and lower liners to focus on heavyweights ahead of the dissolution of parliament and GE14 and selected sector such as O&G could see improve trading interest on the back of the recovery in Brent crude oil.

• Trading Idea – ROHAS. We like Rohas for its exposure to ASEAN which is one of the fastest growing economic regions in the world. Infrastructure investment needs are expected to be robust in the foreseeable future and this will generate believe steady demand for its steel towers. A successful breakout above RM1.40 (downtrend resistance) will spur prices higher towards RM1.52-1.58 levels. Cut loss at RM1.25.

Source: Hong Leong Investment Bank Research - 21 Mar 2018