MARKET REVIEW

Global: Asian markets slid after recent relief rallies on optimism over recovery from reopening economies globally and aggressive fiscal and monetary stimulus, after Powell delievered a dour US economic outlook and suggested the pandemic could inflict longer lasting damage on the economy even as the Fed signaled it would keep rates near zero possibly for years to come. Wall St collapsed overnight as fears of a 2nd wave of the virus and the Fed warned a long journey ahead for the US economic recovery. The Dow tank ed 1,861 pts or 6.9% to 25,128 (still soared 38% from Covid-19 bottom) whilst treasuries, gold and the dollar index rallied.

Malaysia: In line with regional markets slides, KLCI tumbled 18 pts to 1,557.3 after traded within intra-day high of 1,586.2 and a low of 1,550.9, triggered by selloff in banking, telco, gaming and plantation sectors. Trading volume increased to 9.16bn shares worth RM5.91bn as compared to Wednesday’s 7.60bn shares valued at RM4.71bn. Market breadth was bearish with 264 gainers as compared to 928 losers.

TECHNICAL OUTLOOK: KLCI

Following KLCI’s rally to a near five-month high at 1,590 (+31.6% from Covid-19 bottom 1,208), the shooting star candlestick on 9 June and a sharp 18-pt fall yesterday coupled with an overnight Dow’s 6.9% slump could inflict further selldown in the index i n the near term. Key supports are at 1,540 (LT downtrend resistance-turned-support) and 1,517 (200D SMA). Failure to hold at 1,517 would trigger more damage, with KLCI plunging lower towards 1,470-1,500 zones. Key resistances remain at 1,590, 1,600 and 1,612 (YTD high)

MARKET OUTLOOK

Tracking overnight slumps on Wall St and oil prices, KLCI is likely to engage in further profit-taking consolidation after rallying 28.9% from Covid-19 bottom of 1,208. On virus news, the concern of surging numbers of coronavirus cases in the US and developing regions with shaky health systems could undermine efforts to halt the pandemic and re vive trading interests on gloves (like TOPGLOVE, HARTA, SUPERMAX, KOSSAN, RUBEREX, CAREPLUS) and other Covid-19 winners (such as HEXZA, PROLEXUS, SCGM, EG, OCNCASH, K1, NOTION, SCGM, EG, ESCERAM, HLT).

Source: Hong Leong Investment Bank Research - 12 Jun 2020