MARKET REVIEW

Asia’s stock markets ended mixed after the latest developments on the trade front, where US expanded the trade blacklist on Chinese firms, clouding the outlook of a meaningful trade deal in the upcoming trade discussions that will be starting on Thursday in Washington. The Shanghai Composite Index rose 0.39%, while Nikkei 225 and Hang Seng Index fell 0.61% and 0.81%, respectively. Meanwhile, stocks on the local front traded mostly in the negative territory ahead of Budget 2020 and the trade discussion between the US and China; the KLCI ended lower by 0.48% to 1,551.23 pts. Market breadth was negative with decliners led advancers by a ratio of 5-to-3. Market traded volume stood at 1.90bn, worth RM1.68bn. Still, construction stocks traded actively throughout the session ahead of Budget 2020.

Wall Street regained momentum as traders were hoping for some trade deal to be struck between the US and China following some reports commenting that China is prepared to accept a partial deal as long as no more tariffs are imposed by President Trump. Also, China could offer more purchase of agricultural products in return. The Dow and S&P500 rose 0.70% and 0.91%, respectively, while Nasdaq added 1.02%.

TECHNICAL OUTLOOK: KLCI

The FBM KLCI trended towards a 4-year low after violating below 1,580 level last week. The MACD indicator expanded negatively below the zero level, while both the RSI and Stochastic oscillators are in the oversold region. With the oversold indicators, we expect the KLCI to rebound in the near term. Support will be at 1,530, while resistance is located around 1580.

Source: Hong Leong Investment Bank Research - 10 Oct 2019