rakuten trade market reports : Page 24

Seems like interests on equities are slowly creeping back on the back of clearer outlook on interest rates and also the US/China Trade discussion so far. As such, the FBM KLCI breached the 1,600 level for the first time since mid-September yesterday.
Meanwhile, the crude oil price uptrend bodes well for the Ringgit as the MYR/US$ has now strengthened to below 4.15 from almost 4.20 only a couple week back. The Brent Crude closed at above the US$62/barrel yesterday.
Today, we believe the benchmark FBM KLCI to test the 1,610 mark which is seen as the immediate resistance level.

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We expect market sentiment on the local bourse to improve today following the intermittent correction coupled with the record high ending on Wall Street last Friday. The Ringgit is showing signs of strengthening now hovering at RM4.16/US$1 from RM4.19 a week before.
This may be a precursor that foreign funds trickling back into the country which could be positive news for domestic equities. Therefore, we anticipate the benchmark FBM KLCI to test the psychological 1,600 mark again.
Hence one may take the opportunity to look into last week’s laggards within the FBM KLCI index namely Press Metal, MISC, and Dialog.

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Bursa Malaysia turned hero yesterday as the benchmark FBM KLCI jumped by almost 18 points to the 1,600 mark. Interests reverted to the blues with most Banking stocks gained by between 2-5%.
Whether yesterday’s uptrend is sustainable remains to be seen as sentiments are still jittery amid concerns over the US/China Trade talk resurfacing again.
Therefore, we reckon the local bourse may encounter some profit taking today as the FBM KLCI may face with some headwinds as it approaches the 1,600 level that is now a psychological resistance level.

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The Federal Reserves has cut interest rate by another 25bps which is the 3rd in 2019. Though the equity market has had reacted positively on the move, we reckon funds will eventually return to bonds thus impede the uptrend of the equity markets.
Over in Asia, one can also expect interest rate sensitive countries namely Thailand and Indonesia to follow suit in due course.
Meanwhile, the local bourse seems to have found a strong support at the 1,570 level and we expect the FBM KLCI continue with its upward momentum to re-test the 1,600 mark over the immediate term.
Foreign funds outflow has had also taken a pause for the time being hence could be a positive sign especially for the blue chips. Maybe it is time to look at the banking stocks again.

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US stocks were mixed as it hovers at record levels as market widely expects Fed to lower rates again Wednesday by 0.25%, having done the same back in July and September.
All eyes will be on Jerome Powell’s speech to see the tone of his outlook which will provide some direction for the next year’s rate directions. Expectations of phase 1 of trade deal next month during APEC meeting in Chile is likely to bolster the sentiments on equities.
On the local front, the up-coming 3Q19 corporate earnings may spring a positive surprise on the upside based on our estimates, hence now is the time to bargain hunt for stocks at our market as it is well below the 1,600 level.

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