MARKET REVIEW

Key regional benchmark indices ended higher, taking cues from the overnight Wall Street performance after a stronger-than-expected jobs data. Nikkei 225 and Hang Seng Index rose 1.21% and 1.32%, respectively, while Shanghai rallied strongly by 2.49% as trade developments have taken a back seat.

Similarly, on our local bourse, market sentiment was positive and the FBM KLCI closed higher at 1,672.63 pts (+0.53%). However, market breadth was negative with decliners led advancers by a ratio of 5-to-3, accompanied by total market traded volumes and value of 2.01bn and RM2.05bn, respectively. Meanwhile, selected ACE market (Novamsc and Ucrest) and O&G (Sapura Energy and Armada) stocks managed to trade actively higher.

Following the better-than-expected jobs data on Friday and consumer-related data from the Fed suggesting that the consumer borrowing picked up in May as total consumer credit increased to USD3.9 trillion (+7.6%), both data have given a boost to Wall Street; the Dow advanced 1.31%, while S&P500 and Nasdaq gained 0.88% each.

TECHNICAL OUTLOOK: KLCI

The FBM KLCI managed to form a white candle amid better regional sentiment. Also, the MACD Histogram is recovering, while the RSI and Stochastic oscillators are turning higher. Hence, we think the technical rebound could extend towards 1,690-1,700, while support will be pegged around 1,640-1,650.

Taking cues from the overnight positive Wall Street, we think stocks on the broader market may trade on positive note. Nevertheless, traders are still monitoring the trade developments from US and its trading partners, should there be any retaliation measure by its trading partners, and the upside could be limited.

TECHNICAL OUTLOOK: DOW JONES

The Dow continue to surge higher within the symmetrical triangle formation and the MACD Indicator has turned positive, suggesting a potential “buy” signal. Meanwhile, the Stochastic oscillator is hooking positively above 50; indicating the momentum is picking up. We may anticipate the Dow to retest the 25,000 after a mild profit taking activities. The support will be located around 24,000.

In the US, market tone could extend its positive trading in the mid-term with the help of steadier economic data as well as fading tensions on the trade front. However, following the strong surge in the Dow, it may face with mild profit taking activities.

Source: Hong Leong Investment Bank Research - 10 Jul 2018