MARKET REVIEW

Asian key benchmark indices were slightly lower, tracking the softer tone on the overnight Wall Street. Also, both the crude oil and dollar gave up earlier session’s gains, which led to profit taking activities across the market. The Nikkei 225 and Hang Seng Index dropped 0.15% and 0.27% respectively, while Shanghai Composite Index ended flattish despite better than-expected manufacturing PMI data.

Market sentiment on the local front was negative as investors turned cautious ahead of a major event, the GE14 that will be held next Wednesday. The FBM KLCI plunged more than 1% after the opening bell and ended at 1,852.03 pts (-0.98%). There were 3 advancers for every 5 decliners on the broader market. Nevertheless, selected export stocks such as Inari and Heveaboard managed to buck the overall trend amid weaker ringgit.

Despite firmer-than-expected earnings from Apple Inc., Wall Street ended on a negative tone as worries on trade tensions resurfaced with representative from President Donald Trump’s administration and China counterparts were set to meet this week. Both the Dow and S&P500 dropped 0.72%, respectively.

TECHNICAL OUTLOOK: KLCI

After yesterday’s selling pressure, the FBM KLCI is hovering below the SMA50. The MACD Line is hovering above zero, but the MACD Histogram has turned lower. Also, RSI and Stochastics oscillators are pointing negative. With all the weaker technical indications, the key index could extend its consolidation phase over the near term. The resistance is envisaged around 1,870-1,880, while the support will be located around 1,840.

Judging From the Heavy Selling on Key Index Related Stocks Yesterday, We Think Investors May be Taking Profits Ahead of GE14, Providing Them a Healthy Cash-to-equity Ratio in Order to Sail Through This Potential Volatile Period. Also, Short Term Traders May Look Into Opportunities Within Export Related as US Dollar Has Gained Momentum Over the Past Week.

TECHNICAL OUTLOOK: DOW JONES

The Dow has pulled back below the 24,000 psychological level and most of the technical indicators are in the negative region. The immediate support is located around 23,739. Meanwhile, should the Dow perform any rebound move, the upside resistance will be located around 24,500-25,000.

With the Fed’s Meeting Minutes Reaffirmed the Outlook on the Interest Rates Are Likely to Remain Three Hikes for 2018, a Relief Rebound Was Noted on US Equities. However, Should There be Any Surprises on the Trade Talks in the Meet-up Discussions Between US and China This Week May Put Further Pressure on Wall Street and Global Markets.

Source: Hong Leong Investment Bank Research - 3 May 2018