MARKET REVIEW

Global. Asian markets ended mostly higher as the strong US and China economic data added to signs of a global economic recovery. However, the gains were capped by concerns of resurgence in global Covid-19 infections, which may force fresh lockdowns and dampen economic growth. The Dow fell 123 pts at 34077 on profit taking (off all-time high of 34256 last Friday), paced by declines in consumer discretionary and technology stocks as investors reined in their bullish optimism and awaited guidance from a busy week of 1Q21 earnings to justify high valuations.

Malaysia. Contrary to the regional markets’ strength, KLCI slid 8.1 pts to 1600.3 as local Covid-19 cases remained elevated and could impact the pace of economic and corporate earnings recovery. Sentiment stayed sluggish with 739 losers vs 397 gainers, while trading volume stood at 7.5bn securities worth RM4.1bn. Local institutions (+RM93m; 45% of trading value) and retailers (+RM49m; 41.6% of trading value) were major net buyers compared with net selling by foreigners (-RM142m; 13.4% of trading value).

TECHNICAL OUTLOOK: KLCI

Following a fall below the key 30D/100D SMAs yesterday, KLCI is expected to be trapped in sideways consolidation for a while. Only a successful downtrend resistance breakout above 1614 will reignite a fresh rally to retest 1620-1635-1646 zones. On the flip side, a sharp fall below 1597 (mid BB) will trigger more downward pressures to 1585-1575 levels.

MARKET OUTLOOK

Given the resurgence of Covid-19 cases worldwide with new variants that are more resistant to prevailing vaccines, economic recovery plays should take a back seat whilst the healthcare related, especially rubber glove stocks, should continue to outshine amid fears over an exponential rise in global infections from more infectious strains. Major supports are pegged at 1597-1585-1574 whilst resistances are situated at 1614-1620-1635 zones.

Source: Hong Leong Investment Bank Research - 20 Apr 2021