MARKET REVIEW

Asian stock markets ended on a tepid tone as investors focused on US-China trade talks. Hang Seng Index and Shanghai Composite Index declined 1.28% and 0.32%, respectively, while Japan Nikkei 225 was closed for public holiday.

Meanwhile, stocks on the local front remained subdued trading ahead of the GE14, the FBM KLCI was pushed down by 0.54% at 1,841.83 pts led by selected banking heavyweights. Overall market volumes registered 1.61bn (100-day average volumes: 2.89bn) shares traded for the day. Market breadth was negative with a ratio of 5-to-3. Nevertheless, selected export oriented stocks such as Top Glove and Hartalega managed to buck the trend amid stronger US dollar.

Wall Street regained momentum as Apple led technology shares higher after Warren Buffett revealed that he purchased 75m shares during first quarter. Nasdaq rallied 1.71%, while the Dow added 1.39% as the US government added 164k jobs in April while unemployment rate stood at 3.9%.

TECHNICAL OUTLOOK: KLCI

The FBM KLCI has pullback on Friday and ended below the 1,850 resistance level. The MACD Line has crossed below the zero level. Meanwhile, both the RSI and Stochastics oscillators continue to trend lower. The key index may consolidate further between the 1,820- 1,850 levels.

We opine that the sentiment on the local bourse would stay lacklustre ahead of the major event (GE14) in Malaysia. Investors will be focusing on the outcome and determine the investment direction moving forward. Also, the weekly foreign net trade flows is negative at RM161.1m. Hence, we think the FBM KLCI is likely to trade on a sideways mode as investors remain sidelines.

TECHNICAL OUTLOOK: DOW JONES

The Dow has revisited the SMA200 and managed to recover higher last week, forming a bullish candle above the trendline support. With the mild recovery in MACD Indicator, accompanied by RSI hovering above 50, we may anticipate the Dow to trade higher over the near term.

Over on Wall Street, the near term volatility has stabilised amid the better-than-expected earnings season in the US led by technology sector. Nevertheless, should there be any surprises from the trade discussions between the US and China, market volatility may return.

TECHNICAL TRACKER

Closed positions: Last Friday, we had squared off our positions on 3A (7.8% gain), WCT (2.5% gain) and PECCA (4.2% loss)

Source: Hong Leong Investment Bank Research - 7 May 2018