Market Review

• Tracking the tech giants plunge on Wall Street, coupled with the escalation on trade war tensions, Asian shares were mostly lower, extending the negative trend of the previous session. The Nikkei 225 and Shanghai Composite Index fell 0.45% and 0.85%, respectively.

• On the local front, equities on Bursa Malaysia traded cautiously with subdued trading interest ahead of the dissolution of parliament, contributing towards a weaker closing of FBM KLCI (-0.41%). Market volumes stood at 1.89bn, worth RM1.90bn, while market breadth was negative with a ratio of 7-to-2.

• Wall Street managed to rebound after a heavy selloffs on Monday, both the Dow and S&P500 flirted near the widely monitored SMA200 before ending higher by 1.65% and 1.26%, respectively, while tech stocks also made a comeback with Nasdaq advancing 1.04%.

Technical View

Revisited 1,850, softer technical indicators

• As expected, the FBM KLCI declined yesterday towards the support of 1,850. Nevertheless, we believe the overnight positive sentiment could lift the key index higher, despite weakening technical indicators (MACD, RSI and Stochastics). The near term resistance will be pegged around 1,860, followed by 1,876. Support will be set around 1,840-1,850.

Market Outlook

• Dow outlook: At this juncture, investors could still be focusing on the major technical indicator SMA200 as near term trading is likely to be driven by sentiments rather than fundamentals with the rising tension on trade war, coupled with the upcoming jobs data on Friday, where this might dictate the direction of the interest rate outlook.

• KLCI outlook: Tracking the Wall Street overnight positive move, we opine bargain hunting activities may emerge and stocks on Bursa Malaysia may rebound in tandem. Traders should lookout for opportunities within the severely oversold small cap and lower liners with solid fundamentals.

Source: Hong Leong Investment Bank Research - 4 Apr 2018