Global. Asian markets gained as the Fed officials have recently scrambled to reassure markets after its latest hawkish tilt last week, with Fed’s Chairman Powell stressed that a loose monetary policy would remain in place and a gradual withdrawal of emergency support could happen in the months ahead. The S&P 500 (+0.58% to 4266) and Nasdaq (+0.69% to 14369) ended at fresh record highs whilst the Dow surged 0.95% to 34196, following news that Biden has struck a USD1.2 trillion bipartisan infrastructure deal to stimulate further the US economy.

Malaysia. Contrary to higher regional markets, KLCI fell 9.1 pts to 1555.7 as investors continued to assess the domestic fluid politics and the impact on the economy in case of further FMCO extension (after the end of Phase One on 28 June) due to Covid-19 flare-up. Market breadth was bearish with 916 losers trashed 188 gainers. Local retailers emerged as the major buyers (+RM108m; 39% of trading value; 5D: +RM471m) whilst domestic institutions (-RM28m; 43.5% of trading value; 5D: -RM315m) and foreign investors (- RM80m; 17.5% of trading value; 5D: -RM154m) turned net sellers in securities.

TECHNICAL OUTLOOK: KLCI

The persistent sluggish performance has increased the chances of forming a bearish descending triangle pattern should the KLCI fail to defend the crucial 1552 YTD low support in the coming days. A decisive breakdown may send the index lower towards 1545 (61.8% FR), 1533 (20M SMA) and 1500 levels. On the upside, only a strong breakout above the congested resistances at 1578 (200D SMA), 1588 (50D SMA) and 1600 levels can negate the current bearish momentum.

MARKET OUTLOOK

Although overnight Wall St’s rally may provide a boost to Bursa Malaysia today, multiple domestic headwinds could limit the gains (Supports: 1533-1545-1552; Resistances: 1577- 1588-1600) as investors weigh on the domestic fluid politics and the potential extension of FMCO (after the end of Phase One on 28 June) amid unabated Covid-19 cases. Nevertheless, acceleration of the nationwide vaccination programme, expectations of more stimulus measures from the Government, and potential mid-year window dressing activities could cushion further slide.

VIRTUAL PORTFOLIO POSITION-FIG1

In the wake of the market uncertainty, we decided to square off HIAPTEK (5.4% gain) and HSSEB (6.3% Loss) on 24 June.

Source: Hong Leong Investment Bank Research - 25 Jun 2021