MARKET REVIEW

Asia’s key regional benchmark indices ended on a mixed note on the back of tepid trading activities as Japan and China stock exchanges were closed for holiday. Meanwhile, traders took a cautious stance prior to the April US jobs data. The Hang Seng Index and ASX200 gained 0.4% and 0.1%, respectively, but Kospi Index slipped 0.5%.

On the local front, the FBM KLCI rebounded from the intraday low of 1,625.39 pts to close in the positive territory at 1,637.30 pts led by selected banking heavyweights (Maybank, CIMB and Public Bank). Market breadth was positive with 447 gainers vs. 395 decliners, accompanied by 2.82bn shares traded for the session, worth RM2.11bn. Also, construction related stocks such as Ekovest and Gadang traded actively last week.

Wall Street closed higher on Friday, recovered from a two-day decline on the back of stronger than-expected US jobs data in April (US economy added 263k in April, while unemployment rate fell to 3.6%, lowest since Dec-1969). The Dow and S&P500 rose 0.75% and 0.96%, while Nasdaq jumped 1.58%.

TECHNICAL OUTLOOK: KLCI

The FBM KLCI has rebounded last Friday, forming a hammer candle. The MACD indicator, however was hovering below the zero level. The RSI and Stochastic have hooked upwards, but the RSI is located below 50, while Stochastic is overbought. With the mixed technical readings on the indicators, we believe the KLCI’s upside would be capped along 1,658-1,666. Support will be located around 1,610-1,630.

On the local bourse, we opine that traders may stay on the side lines ahead of the MPC meeting of BNM and the FBM KLCI’s upside would be limited around 1,658-1,666. Also, tracking the recent news from the US, Donald Trump commented over the weekend that the tariffs on USD200bn of Chinese products will increase to 25% on Friday could dampen the sentiment on Bursa Malaysia. Nevertheless, trading interest may persist amongst construction and building material segments as volumes were building up in the past weeks on the back of the revival of ECRL and Bandar Malaysia.

TECHNICAL OUTLOOK: DOW JONES

The Dow has rebounded after a two-day decline and the MACD Indicator is still hovering above zero. Also, both the RSI and Stochastic oscillators have hooked above 50 last Friday; indicating that the positive momentum is recovering. Hence, we opine that the overall uptrend is still intact on the Dow and could revisit the immediate resistance of 26,952, while support will be anchored around 26,179, followed by 26,000.

In the US, equities are likely to trend lower over the near term following the statement from Donald Trump, regarding the imposition of additional tariffs (increase to 25% from 10%) on the USD200 of Chinese goods, which will be implemented by Friday. Furthermore, President Trump threatened to impose 25% tariffs on additional USD325bn Chinese goods. At this juncture, the Dow could retrace towards the support around 26,000-26,180.

Source: Hong Leong Investment Bank Research - 6 May 2019