rakuten trade market reports : Page 47

Equities may be back in favour judging by the resurgence of major global indices.
The Dow Jones Industrial Index have had an impressive rebound from below 25,000 to now 26,062. Similarly, regional markets also staged a rebound of sorts.
We believe this uptrend to persists in view of expectations that the Federal Reserves may be looking to reduce interest rates which have already been reflected from the downtrend of the US 10-year Treasury rates now at 2.15% from the high of 2.80% earlier this year.

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How things have changed. What were perceived as a “SELL” market only 2-3 weeks ago, is now viewed with much aplomb. We reckon the US/China trade war may be getting stale and that investors are becoming more immune to such developments.

Nonetheless, we believe market volatility still prevails but to a much lesser extent. Today, regional markets are anticipated to trend higher following Wall Street’s uptick. Domestically we see the FBM KLCI to remain firm with the immediate resistance at around the 1,670 mark.

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Major markets closed mixed last week amid the continuing tension between the US and China coupled with the Eid Mubarak break in certain countries. The DJI staged an impressive rebound of 4.7% or almost 1,200 points to almost 26,000 with the hope that the feds may cut rates again soon.
The local bourse experienced a mild profit taking ahead of the Raya break. The FBM KLCI lost a mere 0.4% or 6 points for the week to 1,649.33. Finally, foreign funds flow turned positive for the 2nd week running of RM350.0m with YTD net outflow down to RM4.47bn.
Performance amongst the FBMKLCI components saw 9 gainers to 18 losers. Top 3 performers include Top Glove (+1.2%), PPB (+1.0%) and Nestle (+0.7%) while the top 3 losers were Genting (-2.8%), Sime (-2.2%) and SIMEPLT (-1.7%).

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US Dow Jones has rebounded close to 1,000 points for the last three trading sessions on the back of Federal Reserve Chairman Jerome H. Powell saying the central bank is prepared to act to sustain economic expansion if President Trump trade was weakened the economy. The comments were interpreted as such that interest rate cuts could be on the cards.
Foreign net buying has turned positive for the 4^th straight day which is a good sign.

As this is a shortened trading week for Malaysia with Raya Eid celebrations, we expect our market to also be in holiday mood and will see sporadic trading activity.

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Despite the recent concluded results season of which we reckon is within expectations, we noticed many analysts have become cautious as there were some rather apparent downgrade on forecasts among the FBM KLCI constituents.
We presumed such stance could be due to the prevailing trade standoff between the US and China. Amongst others, the plantation sector was the biggest victim with expectations being cut rather drastically.
As a result, earnings estimate for the sector have had been reduced from -1.9% to -7.3% for 2019. Notwithstanding this, we believe such move could be their part in managing expectations and if the planters are able to churn out better figures in the following quarters, upgrade could be on the cards again.

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