Global. Asian markets ended mixed as a drag in high-level negotiations on a new US Covid-19 stimulus bill and a resurgence in the worldwide Covid-19 cases dampened investors’ sentiment. Overnight, the Dow slipped as much as 170 pts amid concerns about another wave of European and American coronavirus cases and uncertainty ahead of the 3 Nov US elections with the final presidential debate due tonight. However, the index staged a late recovery to end 152 pts higher at 28363 after Nancy Pelosi said Democrats and the Trump administration were on the verge of an agreement.
Malaysia. KLCI staged a 6.4pt final hour rebound to 1498.8 pts from intraday low at 1485.8 (-6.7 pts). Despite the positive close, market breadth was negative with 461 gainers vs 614 losers as investors weighed on a spike in global Covid-19 infections and a deadlock in the US stimulus negotiations coupled with an evaluation of the restricted movement policies on the nation's economy. Yesterday, local retailers (RM81m) and foreign investors (RM19m) were the major buyers whilst local institutional investors net sold RM100m in equities.
In the short term, we expect KLCI to engage in an extended sideways consolidation mode unless it can swiftly reclaiming above 1523 (50D SMA) overhead resistance. Crossing this barrier will lift the index higher towards 1541 (17 Sep high) and 1564 (90W SMA) levels next. On the contrary, a sharp retreat below the 1496 supports (200D SMA) could reignite a risk-off mode, potentially pushing the index lower towards 1489 (lower BB), 1474 (10 Sep low) and 1461 (50% FR) levels.
Despite closing a tad higher from the critical 200D SMA support (now at 1496) yesterday, KLCI is still trapped in a tug-a-war between the bulls and bears ahead of the US presidential election (3 Nov), Budget 2021 presentation (6 Nov) and a resurgence of Covid19 infections worldwide as the winter season begins in the Northern Hemisphere. Moreover, more targeted lockdowns amid spiking Covid-19 local transmissions and clusters in Malaysia would dampen our expectations for a 2H20 economic and corporate earnings recovery.
In the wake of the market uncertainty, we took profit on MISC (5.0% gain) yesterday.
Source: Hong Leong Investment Bank Research - 23 Oct 2020
Created by HLInvest | Jul 19, 2024