Market review

• Tracking the Wall Street slump amid the Facebook scandal, coupled with the protectionist measures by President Trump, Asian regional equities ended mostly lower led by the technology sector. The Nikkei 225 and Shanghai Composite Index slid 1.34% and 1.40%, respectively, while Hang Seng Index plunged 2.50%.

• Selling pressure resumed on the local front following the weakness on Wall Street. The FBM KLCI traded lower by 0.25% to 1,857.87 pts, hovering below the earlier support of 1,860. Trading activities were lacklustre as overall traded volumes stayed flattish near the 2.0bn mark. Market breadth was negative with losers led gainers by a ratio of 3-to-1. Under this cautious environment, REITs sector has gained mild trading interest led by KLCC and CMMT.

• Wall Street closed slightly negative despite fairly better market breadth on NYSE. Investors remained cautious on technology stocks following the Facebook-Cambridge Analytica issue and could trigger further impose of tighter regulations on social media platform, resulting another down day on the Nasdaq, falling below the 7,000 level at 6,949.23 pts (-0.85%), while the Dow ended marginally lower by 0.04%.

Technical view

Mixed technical indicators, KLCI to stay neutral

• Although the FBM KLCI dropped below the 1,860 level, we think the key index remains resilient despite the Wall Street tech slump. The MACD indicator stayed flattish, while the RSI and Stochastics oscillators are hovering near 50. We think the FBM KLCI could retest the 1,876 level over the near term. On the flip side, should the key index violates below 1,850, next support will be located around 1,840.

Market outlook

• Dow outlook: Although the near term volatility may persist on Wall Street amid the uncertain protectionist measures of President Trump, we believe the recent uncertainty may be cushioned out by the revised 4Q2017 US GDP at 2.9% vs the consensus estimates of 2.7% amid improved consumer spending. Hence the Dow's immediate support will be located around 23,500.

• KLCI outlook: Meanwhile, we believe Malaysia's stock market should see stabilising trading activities on KLCI ahead a potential 1Q window dressing activities. However, we remain cautious on small cap and ACE market as both the sub-indices may continue the trend lower amid weakening technicals.

Source: Hong Leong Investment Bank Research - 28 March 2018