rakuten trade market reports : Page 31

Uncertainties continue to plague the global financial markets as interest rates are expected to be the major determinant over the course of next few months. As many are expecting the Federal Reserves to further cut rates, the ECB is also seen to be biased towards a lower rate regime.
Meanwhile, the US 10-year Treasury yield had declined to 1.72% from above the 1.90% level only a week ago as funds returned Treasuries at the expense of equities with the DJI Index closed almost 160 points lower last Friday.
All said, we can expect another boring day on the local bourse with the FBM KLCI expected to trend between the 1,595-1,605 range today.

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Major stock markets ended in negative territory last week, except for Indonesia’s JCI which posted a weekly gain of 0.2%. Hong Kong’s Hang Seng Index dropped 688.9 points to 26,447 level weighed down by the ongoing protest.
Brent crude oil price finished at USD64.3/bb lifted by the Middle East tension. Locally, the FBM KLCI lost 0.43% or 6.9 points to 1,597.4. Weekly foreign funds turned negative to RM249.3m of net outflow.
Performance amongst the FBMKLCI components saw 9 gainers to 20 losers. Top 3 performers include AMBANK (+2.68%), AIRPORT (+2.22%) and PETGAS (+1.22%) while the 3 losers were GENM (-4.69%), KLK (-2.21%) and HLFG (-2.18%).

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As widely expected, the Federal Reserve has cut 25bps yesterday and this marks the second rate cut for the year while leaving room for further easing.
The back-to-back rate cuts have seen most major central banks globally following the easing of rates to support the slowdown in growth in most countries.
Malaysia which move ahead of the rest with the rate cut back in May has time on its side, and we see no rush to cut rates. As for our equity market, we expect the FBM KLCI to remain range bound within 1,600 level and selective buying opportunities.

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Stocks on Wall Street continued to rally to its near all-time high level while crude oil price has tapered off to below high breaching USD70/bbl to settle at USD65/bbl, however it will continue to remain volatile.
All eyes will on Federal Reserve 2-day meeting which will announce its latest decision on monetary policy. Market expectations is for a 25bps cut and this would be the second rate cut in 2019.
As for our market, we expect the FBM KLCI to remain firmly above 1,600 mark as foreign funds were net inflow for the past week and this week.

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Wall Street remains volatile exacerbated by the attack on Saudi Arabia’s Aramco facilities. We reckon there may be some positive knee jerk reactions on O&G related stocks but cautioned that this may only be temporary as the US will release some of its inventory into the market until Saudi’s production resumes to normal level which is estimated to take several months.
Locally, we expect the FBM KLCI to re-test the 1,610 mark as we noticed that foreign funds had been trickling in of late. Last week saw an encouraging RM495m of net foreign inflow.

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