MARKET REVIEW

Global: As President Trump tweeted regarding the oil production cut by 10-15m bpd, crude oil rallied, but Asia’s stock markets ended mostly lower as investors digested the record-high jobless claims of 6.65m in the US. Meanwhile, the ongoing Covid-19 pandemic situation globally, coupled with US nonfarm payrolls fell by 701k in March (worst jobs report since 2009) as well as unemployment rate jumped to 4.4% have dampen the sentiment on Wall Street; the Dow declined 1.69% last Friday.

Malaysia: In line with the regional markets, the FBM KLCI closed flat at 1,330.65 pts (-0.02%). Market breadth was negative with 440 decliners against 309 advancers, accompenid by traded volume of 5.35bn, worth RM2.48bn. Most of the traders were focusing on O&G stocks after a strong overnight rally on Brent oil price (as high as USD36 on Thursday). Nevertheless, we noticed construction and building materials stocks’ trading volume were also building up on Friday.

TECHNICAL OUTLOOK: KLCI

The FBM KLCI continued to trend sideways between 1317-1352 over the past 8 trading days. The MACD Line and Histogram have continued to recover below the zero level over the past two trading days. Meanwhile, both the RSI and Stochastic oscillators are trending higher above 50. The key index could retest the 1,350-1,370 levels, while support is located around 1,313, followed by 1,300.

MARKET OUTLOOK

With the ongoing Covid-19 outbreak, coupled with further “lockdown” in several countries until at least another one month, we expect economic activities could slow down over the near term. Moreover, the sluggish US jobs data could limit the upside potential on Wall Street and the selling pressure could spillover towards stocks on the local exchange. Hence, we suggest traders to deploy sell into strength strategy and KLCI could trade in a rangebound mode between 1,270-1,370.

Source: Hong Leong Investment Bank Research - 13 Apr 2020