Market review

• Asian stock markets ended on mixed after Trump’s consideration of US$100bn in new tariffs on China. Investors were uncertain and traded sideways on the equities amid the escalated tension of a potential trade war. The Nikkei 225 fell 0.36%, but Hang Seng Index advances 1.11%.

• Meanwhile, stocks on the local front were generally lower as there were 5 decliners for every 3 advancers on the broader market. The FBM KLCI traded mostly in the negative territory as Prime Minister Datuk Seri Najib declared the dissolution of the Parliament, but managed to inch marginally higher during the last hour of trading by 0.05% to end at 1,837.01 pts.

• On top of the trade war news flows, whereby more levies were potentially imposed on China, Wall Street also digested disappointed jobs data on Friday. The major indexes (Dow, S&P500 and Nasdaq) plunged more than 2% on Friday.

Technical view

Still trending below resistance of 1,850

• The FBM KLCI ended marginally higher, but the MACD Line is hovering below zero. The RSI and Stochastics oscillators are still below 50, indicating that the momentum is still soft at this juncture. KLCI’s upside resistance will be pegged around 1,850-1,860, while support will be set around 1,810-1,820.

Market outlook

• Dow outlook: We think in the US, the market volatility may persist with the ongoing reciprocal actions between the US and China. Any wild card by both parties would dampen the market sentiment. However, the recent tariffs measures would not be implemented until public comment process is concluded.

• KLCI outlook : Meanwhile, stocks on Bursa Malaysia may face with further selling pressure amid the spill over of negative sentiment from Wall Street. Hence, traders might be deploying a wait-and-see strategy over the near term until US and China discussions are settled.

• Closed positions: Last Friday, we had squared off our Trading idea positions in RHBBANK (4.6% loss) and Sunway (4.5% loss) amid weakening technicals.

Source: Hong Leong Investment Bank Research - 9 Apr 2018