MARKET REVIEW

Global: Asian markets extended their relief rallies to a near 3-month high, as hopes of more stimulus measures and a further easing in coronavirus-led lockdowns around the world offset caution over US-China turmoil. Ahead of the crucial nonfarm payrolls report tomorrow night, the Dow surged 527 pts or 2.1% at 26270 to record its 3rd straight cumulative gains of 886 pts as hopes of a faster economic recovery were given a boost amid better-than-expected ADP private payroll and ISM Services data, shrugging off the escalating social strife and US-China tension.

Malaysia: Led by a strong rotational rebound in the inexpensive valuations of battered and laggard financial stocks (despite near-term headwinds concerning moratorium loan loss booking and asset quality), KLCI soared 30.8 pts to 1538.5 to record its six winning st reaks, thanks to optimism about the reopening of the global economy and a barrage of central banks and government stimulus coupled with a possible lifting to the conditional MCO ending 9 June. Trading volume decreased to 9.42bn shares worth RM7.02bn as compared to Tuesday’s 9.62bn shares worth RM6.21bn. Market breadth was positive with 564 gainers as compared to 526 losers.

TECHNICAL OUTLOOK: KLCI

After successfully refilling the 1460-1480 gap (9 Mar) and above the crucial 200D SMA at 1518 coupled with an extended bullish rally on Wall St, the bulls are in control to lift KLCI to one more leg up towards 1560 (upper channel) and 1600 psychological barriers. As for the immediate term, with the RSI now approaching 80 and overbought, the index may undergo a pullback towards 1500, 1466 (10D SMA) and 1447 (uptrend line support) levels. Failure to stay above these territories could suggest that the bulls are taking a breather, potentially triggering another down leg to retest 1400 and 1380 (50D SMA) zones.

MARKET OUTLOOK

After successfully refilling the 1460-1480 gap (9 Mar) and above the crucial 200D SMA at 1518 coupled with an extended rally on Wall St, the liquidity-driven bulls are in control to lift KLCI to one more leg up towards 1560 (upper channel) and 1600 psychological barriers, as investors clung to optimism for a gradual re-opening of economies from the COVID-19 lockdowns and supported by the unprecedented fiscal and monetary stimulus as backstops.

Source: Hong Leong Investment Bank Research - 10 Jun 2020