MARKET REVIEW

Asian stock markets ended broadly higher as market digested the US-EU trade developments, coupled with positive overnight performance on Wall Street despite a drop in Nasdaq led by Facebook’s decline. The Nikkei 225 and Hang Seng Index rose 0.56% and 0.08%, respectively, but Shanghai Composite Index was down 0.30%. Meanwhile, the FBM KLCI managed to recoup earlier losses and closed in the positive territory on the back of last minute buying support into selected banking heavyweights such as CIMB and Hong Leong Bank as well as Airport and MISC. Market breadth, however was negative with 511 losers vs 382 gainers as profit taking activities were noted within the broader market. Market traded volumes stood at 2.34bn, worth RM1.98bn. Nevertheless, technology stocks were traded actively higher amid weaker ringgit outlook. Trading sentiment on Wall Street was affected by another round of selling within technology heavyweights following the selloff in Facebook; selling pressure were noted within Twitter and Intel as Twitter’s quarterly numbers were overshadowed by weaker outlook as monthly active user growth were not up to expectations, while Intel decline on a potential delay on its next generation chips. The Dow decreased 0.30%, while S&P500 and Nasdaq dropped 0.46% and 1.66%, respectively.

TECHNICAL OUTLOOK: KLCI

The FBM KLCI header higher for another session, but it is still hovering below the SMA200. The MACD Line is above zero but the MACD Histogram is weakening. Meanwhile, the RSI and Stochastic oscillators are overbought; indicating that the upside could be limited. The resistance will be pegged around 1,790-1,800. Supports will be anchored near the 1,740- 1,750 levels.

MARKET REVIEW

Asian stock markets ended broadly higher as market digested the US-EU trade developments, coupled with positive overnight performance on Wall Street despite a drop in Nasdaq led by Facebook’s decline. The Nikkei 225 and Hang Seng Index rose 0.56% and 0.08%, respectively, but Shanghai Composite Index was down 0.30%. Meanwhile, the FBM KLCI managed to recoup earlier losses and closed in the positive territory on the back of last minute buying support into selected banking heavyweights such as CIMB and Hong Leong Bank as well as Airport and MISC. Market breadth, however was negative with 511 losers vs 382 gainers as profit taking activities were noted within the broader market. Market traded volumes stood at 2.34bn, worth RM1.98bn. Nevertheless, technology stocks were traded actively higher amid weaker ringgit outlook. Trading sentiment on Wall Street was affected by another round of selling within technology heavyweights following the selloff in Facebook; selling pressure were noted within Twitter and Intel as Twitter’s quarterly numbers were overshadowed by weaker outlook as monthly active user growth were not up to expectations, while Intel decline on a potential delay on its next generation chips. The Dow decreased 0.30%, while S&P500 and Nasdaq dropped 0.46% and 1.66%, respectively.

TECHNICAL OUTLOOK: KLCI

The FBM KLCI header higher for another session, but it is still hovering below the SMA200. The MACD Line is above zero but the MACD Histogram is weakening. Meanwhile, the RSI and Stochastic oscillators are overbought; indicating that the upside could be limited. The resistance will be pegged around 1,790-1,800. Supports will be anchored near the 1,740- 1,750 levels.

On the local front, we may anticipate a softer trading sentiment, taking cues from the negative performance on Wall Street. Also, we opine that the broader market could take a mild breather after the recent strong rebound over the past two weeks as foreigners is still net selling last week by RM494.4m. 

TECHNICAL OUTLOOK: DOW JONES

The Dow hit the immediate resistance of 25,500 after the symmetrical formation breakout last week. The MACD indicators are improving but both the momentum oscillators are suggesting that the Dow is overbought. We opine that the Dow’s upside could be capped along 25,500 and may be due for a short term pullback towards 25,000.

Wall Street could extend its volatile trading tone amid the final busy week of the 2Q reporting season. Also, investors will be focusing on the interest rate outlook in the upcoming FOMC meeting that will be held this week. Meanwhile, US labour department will be releasing the July jobs data on Friday.

TECHNICAL TRACKER: CLOSED POSITIONS

Last Friday, we squared off two 3Q18 stock picks, TALIWORKS (11.1% gains) and PANTECH (4.2% loss).

Source: Hong Leong Investment Bank Research - 30 July 2018