MARKET REVIEW

Global: Asian markets rebounded, boosted by higher oil prices during Asian hours after American Petroleum Institute data showed US crude inventories rose lower than consensus and more governments around the world contemplated to reopen their economies. Overnight, the Dow surged 532 pts or 2.2% to 21633, taking cues from Fed’s pledge to mount a robust and protracted fight to offset fallout from the coronavirus pandemic, and a highly significant progress in Gilead’s coronavirus treatment, offsetting a devastating report of the US 1Q20 GDP of -4.8%.

Malaysia: Tracking higher oil prices, KLCI jumped 8.1 pts to 1380.3 amid loosening of MCO despite being extended to 12 May, as the government has allowed sectors that have been operating during the Phase 1, 2 and 3 MCOs to ramp up to full capacity effective 29 Apr. Trading volume reduced to 4.83bn shares worth RM2.47bn at 5.02bn against Tuesday’s 5.02bn shares valued at RM2.49bn. However, market breadth was bullish with 629 gainers vs 249 losers, boosted by strong interests in technology (Technology index surged 3.5%) and energy related shares (Energy index gained 2.5%).

TECHNICAL OUTLOOK: KLCI

After forming a Gravestone Doji on 20 Apr, KLCI managed to build a base near the immediate 20D SMA support over the past 5 trading days. Following the 8.1-pt advance yesterday, the MACD Indicator is hovering marginally above zero whilst the RSI and Stochastic oscillator are inching up. Hence, we anticipate KLCI to remain sideways but with an upward bias to break the 50D SMA or 1386 resistance. Breaking this hurdle successfully will lift index from current consolidation mode to revisit 1400, 1413 (50% FR) and 1429 (20 Apr high) levels. Key supports are located at 1371 (20D SMA) and 1359 (22 Apr low).

MARKET OUTLOOK

Tracking overnight rally on Dow and oil prices coupled with the relaxation of MCO to kickstart subdued economy, KLCI could break the immediate 1386 (50D SMA) and advance further towards 1400 levels, with more formidable resistances at 1413-1429 levels as we brace for the upcoming May-June reporting season. With that, traders may focus on construction stocks given the feel-good factor following the reopening of economic sectors in Malaysia.

Source: Hong Leong Investment Bank Research - 30 Apr 2020