MARKET REVIEW

Global: Asian markets ended a volatile session higher following Trump’s assertion that the US-China trade deal remains in place, calming confused investors that were spooked by trade adviser Peter Navarro’s earlier comment that the US-China trade deal was in trouble. The Dow rallied as much as 290 pts amid Trump’s clarification that the ongoing US-China trade deal is fully intact and improving economic data (from June manufacturing & services PMI and May new home sales) coupled with Mnuchin’s comment that another coronavirus relief bill would be passed in Congress in July. However, the gains were pared down to 131 pts at 26156 after Dr. Fauci warned Congress that the US is facing a “disturbing surge” of coronavirus cases. Meanwhile. Nasdaq surged 75 pts to a fresh record high at 10131 with Apple leading major tech names higher as investors cheered a slew of announcements from the tech giant’s Worldwide Developers Conference.

Malaysia. Bucking regional markets, KLCI fell as much as 10.5 pts before narrowing the losses to 4.2 pts at 1507 amid uncertainties in the local political scene and the expiry of the short-selling ban on 30 June. Trading volume increased to 8.75bn shares worth RM2.98bn as compared to Monday’s 6.33bn shares worth RM3.11bn. Market breadth was negative with 423 gainers as compared to 522 losers.

TECHNICAL OUTLOOK: KLCI

In a volatile session, KLCI fell back below the 1513 or key 200D SMA to end 4 pts lower at 1507. In the short term, the index may continue to trade within the 1490 (15 June low) and 1535 range until a breakout on either side. A close below the 1490-1500 supports would point to a deeper consolidation towards 1478 (30D SMA) and 1440 (100D SMA) territory.

MARKET OUTLOOK

Barring a successful reclaim above the key 200D SMA at 1513 and and 1535 (the LT resistance trend line drawn from the 1896 high), the odds are still favour for more consolidation ahead. A decisive breakdown of the 1490 (15 June low) support would signal a deeper correction is in place, compounded by the fluidity of local political scene and the expiry of short-selling ban on 30 June. Nevertheless, hope for a mid-year window dressing is likely to cushion selloff with lower support at 1450-1470 levels. As for stock pick,

TOPGLOV (BUY-RM23.91) has formed a flag breakout following recent rebound from RM14.02 (19 June low). The stock should attract bargain hunters prior to recovery upside to the RM16.30-17.00-18.00 zones. Key supports are situated at RM15.00-14.50-14.00

Source: Hong Leong Investment Bank Research - 24 Jun 2020