MARKET REVIEW

Global: Asian markets rose as hopes for a fresh rollout of stimulus measures from major central banks to cushion the devastating impact of Covid-19 and plans for lockdowns easing in the US and Europe underpinned sentiment. Overnight, the Dow advanced 359 pts or 1.5% to 24134, recording its 4th winning streak as several countries in Europe and some states in the US began to outline plans to moderate restrictions, shaking off the continued malaise in WTI prices (-24.6% or US$4.16 at US$12.78) amid collapsed in demand and storage constraints.

Malaysia: KLCI gained as much as 8.5 pts to 1378.4 before trimming down to 0.3-pt gains at 1370.2 amid a renewed selloff in oil prices during Asian hours. Trading volume increased to 5.18bn shares (worth RM2.28bn) as compared to Friday’s 4.69bn shares (worth RM2.49bn) whilst market breadth remained positive with 469 gainers vs 396 losers (G/L 1.18x), slightly better than Friday’s 1.11x but still below Thursday (1.22x) and Wednesday (1.23x).

TECHNICAL OUTLOOK: KLCI

In wake of the bearish trend reversal Gravestone Doji formation after refilling the 1369-1419 gap on 20 Apr, KLCI has been trending sideways over the past the four sessions. As the MACD/RSI/Stochastic indicators are tapering off from their recent resistances, KLCI is likely to extend its consolidation mode, with key support at 1359 (22 Apr) and 1341 (30D SMA). A violation below 1341 will trigger further slide to 1300 zones. Conversely, a successful breakout above 50D SMA or 1392 pts will lift index from current consolidation mode to revisit 1413 (50% FR), 1429 (20 Apr high) and 1461 (61.8% FR) levels.

MARKET OUTLOOK

Despite the positive performance on the Dow and flattening curve in the local Covid-19 confirmed cases, KLCI may face some hiccups breaking the 50D SMA (1392) in this shortened trading week (1 May-Labour day), due to the rout in oil prices and pending the announcement whether the short selling ban would be extended beyond 30 April. Moreover, the 3rd MCO extension to 12 May would pose downbeat ramifications to the economy and corporate earnings in 2020, as we had slashed our 2020 GDP forecast from -4.0% to -6.0%, and expect BNM to reduce the OPR by 50bps, which may come as early as 5 May MPC meeting.

CLOSED POSITION

Yesterday, we had squared off our Technical Tracker positions on ASTRO (+17.7% gain) and SDS (+12.2% gain) after hitting the R1/R2 upside targets.

Source: Hong Leong Investment Bank Research - 28 Apr 2020