MARKET REVIEW

Global: Asian markets ended mixed after Wall Street gave up solid gains on Tuesday as concerns over global recession outweighed easing fatality rates at global epicentres that may signal the coronavirus pandemic is peaking. While China has lifted travel restrictions in Wuhan effective from yesterday (since a lockdown on 23 Jan), other Asian countries continued to put extraordinary measures in place to battle the coronavirus pandemic. Overnight, the Dow jumped 780 at 23433 as investors hoped for more Fed supports and a potential sooner -than expected rollback of containment measures to fight the deadly coronavirus after President Trump and NY Governor Cuomo gave positive remarks that Americans might be getting to the top of the “curve” in relation to the coronavirus.

Malaysia: Taking cue from volatile regional markets and a retreat in oil prices coupled with pending the MCO announcement tomorrow, KLCI lost 8.5 pts to 1361.4 yesterday on profit taking after rallying as much as 13.5% to 1370 (7 Apr). Trading volume decreased to 5.36bn shares worth RM2.67bn as compared to Tuesday’s 6.6bn shares worth RM3.37bn. Market breadth was negative with 316 gainers as compared to 617 losers. Construction sector has gained some attention as volume has seen picking up on GAMUDA, GADANG and AZRB.

TECHNICAL OUTLOOK: KLCI

Following the sideways consolidation phase over the past 9 trading days, the key index has breached above the key neckline resitance of 1353 on 7 Apr to a high of 1370 (7 Apr) before finishing 8.5 pts lower at 1361.4 yesterday. While the MACD Indicator is suggesting a recovery trend but the RSI pattern is flattening and Stochastic oscillators are grossly overbought, indicating upside could be limited. We believe the resistance will be located around 1370-1400, while support is located around 1317-1340.

MARKET OUTLOOK

In wake of overnight Dow’s 3.4% surge and a 5.6% rally on oil prices coupled with early signs of flattening curve in the pandemic -stricken hotspots, KLCI may regain its momentum toward 1370-1400 territory. Nevertheless, we reiterate SELL INTO RALLY as we do not expect the formidable hurdles at 1369-1419 gap (16 March) to be filled in the near term in anticipation of potential further MCO extension and investors continue to assess the fallout from COVID-19, which is still wreaking havoc on domestic and global economies. Conversely, a decisive breakdown below immediate support near 1340 (10D SMA) will accelerate further selling spree towards 1300 levels.

Source: Hong Leong Investment Bank Research - 9 Apr 2020