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Bursa Malaysia Shares: Stimulus Hopes and Oil Price to Underpin Sentiment

Bursa Malaysia shares managed to rebound from early decline in choppy trade Thursday, in line with most of the regional markets as weak trade data from Japan weighed on sentiment. The index inched up by 0.55 points to close at the day’s high of 1,694.87, off an early low of 1,690.44, as losers beat gainers 439 to 384 on turnover totaling 2.85bn shares worth RM1.99bn.

Support from Rising 10-day ma (1,682)
Hopes for further stimulus from Japan which reported weak trade data and oil output freeze from major producers which pushed WTI crude up to USD48.22 a barrel overnight should underpin local trading sentiment. Immediate support for the index remains at the rising 10-day moving average at 1,682, next will be the 100 and 200-day ma at 1,665, followed by the 50-day ma at 1,655. Immediate resistance stays at Tuesday’s high matching the 1,700 psychological level, with tougher resistance from the April peak of 1,729.

Take Profit on AMMB & CIMB
Weakening trend indicators on AMMB implies near-term correction potential towards the 50-day moving average (RM4.38), with better supports from the lower Bollinger band (RM4.26) and the low of 26/05/15 (RM4.17). Resistance is seen at 23.6%FR (RM4.68).

Likewise, CIMB could fall back for profit-taking correction from the recent rally, with better support from 10-day moving average (RM4.60) and 23.6%FR (RM4.43) and immediate resistance from upper Bollinger band (RM4.82).

Asian Markets Close Mixed On Weak Japanese Data
Asian market close mixed Thursday, with Japanese shares dragged lower by weak trade data and stronger yen. Japanese exports tumbled at their steepest pace in seven years as a stronger yen weighed on international shipments. Exports slid 14 percent on-year, as forecast by a Reuter’s poll of economists. This was the tenth month in a row that exports fell from a year earlier. Imports meanwhile tanked 24.7 percent on-year, worse than the 20.6 percent decline expected and the largest drop since 2009. Japan's Nikkei share average dropped to a near two-week low, as a strong yen soured investor risk appetite and dragged stocks lower across the board. That spurred declines in major exporters, with Toyota down 1.15 percent, Nissan down 1.95 percent and Mazda dropping 2.87 percent. The Nikkei fell 1.6 percent to 16,486.01, the lowest closing level since Aug. 5.

In Australia, the ASX 200 dropped 0.49 percent at 5,507.82, with the heavily-weighted financials sub-index declining 0.86 percent. China stocks also surrendered early gains and ended Thursday lower, as financial shares dropped while property plays pared sharp gains on profit-taking. The market was firm in morning trade, aided by a surge in the real estate sector, but selling pressure surfaced in the afternoon as some investors took profit. The bluechip CSI300 index fell 0.3 percent, to 3,364.49, while the Shanghai Composite Index lost 0.2 percent to 3,104.11 points.


Wall Street Notch Slight Gains as Oil Rallies
U.S. equities closed slightly higher Thursday, amid surging oil prices, as investors digested fresh economic data as well as upbeat outlook on Wal-Mart shares. West Texas Intermediate crude extended its longest advance in more than a year amid speculation major producers may act to curb output and as U.S. oil and gasoline inventories declined. WTI for September delivery rose 3.1 percent to settle at USD48.22 a barrel. The Organization of the Petroleum Exporting Countries is set to meet in late September, and leaders of both Saudi Arabia and Russia have expressed interest in revisiting a deal to limit production at that meeting.

On the data front, weekly jobless claims fell 4,000 to 262,000, while the August Philadelphia Fed business index came in line with expectations. Investors expect more insight on the rate outlook at an annual meeting of central bankers from around the world in Jackson Hole, Wyoming, next week. The energy sector led gains in the S&P 500. Investors also digested quarterly results from Dow component Wal-Mart, which reported better-than-expected earnings and revenue and raised its full-year guidance. Wal-Mart shares rose 1.88 percent in Thursday trade. The Dow Jones industrial average gained 23.76 points, or 0.13 percent, to 18,597.7, the S&P 500 added 4.8 points, or 0.22 percent, to 2,187.02 and the Nasdaq Composite rose 11.49 points, or 0.22 percent, to 5,240.15

FBM KLCI - Strong Ringgit to Boost Sentiment

bn2vBlue chips led by banks again extended gains Wednesday, after the ringgit appreciated to a near eight-month high of 3.91 to the USD, the strongest since early Aug last year, copying regional strength after the US Fed chief suggested interest rates may not be raised soon. The KLCI added 2.78 points to end at 1,717.82, off an early high of 1,724.13 and low of 1,716.37, as gainers edged losers 433 to 351 on improved total turnover of 1.85bn shares worth RM2.34bn.

Resistance at 1,728, Support at 1,692
Given the recent strong ringgit trend, companies with high foreign borrowings may recover further from their severe selloffs while major exporters experience profit-taking corrections. Significant resistance for the index stays at 1,728, the 61.8%FR of the 1,867 to 1,503 selloff matching the October 2015 peak, with subsequent stronger hurdles from the August 2015 high of 1,744 and the 76.4%FR level at 1,781. Immediate support stays at the rising 30-day moving average (1,692) and then the 200-day moving average at 1,670, followed next by the 100-day average at 1,667.

BUY AirAsia & AirAsia X for Recovery With overbought momentum neutralized by recent profit-taking dips, AirAsia should attract
buyers again looking for rebound upside towards RM2.00, the 76.4%FR (RM2.01) and
RM2.40 ahead, while key chart supports are at the 61.8%FR (RM1.77), 30-day moving
average (RM1.66) and 50%FR (RM1.58). Similarly, AirAsia X is attractive to bargain on dips
towards chart supports from the 30-day (28sen) or 50-day (26sen) moving averages for
rebound upside towards recent high of 32.5sen, while a confirmed breakout could aim for
the 38.2%FR (37sen), 50%FR (43sen) or 61.8%FR (50sen) going forward.

Cautious Yellen Boosts Asian Markets
Most Asian markets advanced after remarks from Federal Reserve chair Janet Yellen assuaged concerns about a near-term interest rate hike, but Japan's shares retreated as the yen strengthened. Markets scaled back expectations for how fast and far U.S. interest rates might rise this year, after Fed Chair Janet Yellen emphasised global dangers to growth and inflation, and thus the need to proceed "cautiously" on tightening policy. China stocks enjoyed their best day in a month, with main indexes jumping more than 2 percent, as the mainland market joined a global rally after U.S. Federal Reserve remarks hosed down expectations of imminent interest rate hikes. The blue-chip CSI300 index rose 2.6 percent, to 3,216.28, while the Shanghai Composite Index gained 2.8 percent, to 3,000.3 points. The energy sector was among the biggest gainers, with index heavyweights including Sinopec and PetroChina rising sharply on expectations of pending reforms in the sector.

Meanwhile, Australia's ASX 200 was off earlier highs, retracing gains of more than 1 percent to close up 5.78 points, or 0.12 percent, at 5,010.30. Virgin Australia shares tumbled 8.97 percent after Reuters reported the airline's largest stakeholder, Air New Zealand, is considering selling its 25.9 percent stake. However, Japanese stocks fell on Wednesday as  the yen strengthened against the dollar after U.S. Federal Reserve Chair Janet Yellen called for caution on raising interest rates, with the stronger yen weighing on Japan's exporters. The Nikkei share average fell 1.3 percent to 16,878.96 for its lowest close in nearly two weeks. Shares of Takata Corp plunged 19.5 percent after Bloomberg News reported the company's worst-case scenario for its recall could involve 287.5 million potentially defective air bag inflators.

Wall Street Gains on Rate Optimism
U.S. stocks moved further into positive territory for 2016 on Wednesday, as investors continued to scale back bets on higher U.S. interest rates. The bulk of the move came afterFederal Reserve Chairwoman Janet Yellen on Tuesday signalled a slower path for rate increases. Low interest rates have boosted risky assets such as stocks in recent years. On Wednesday, her comments were echoed by Chicago Fed President Charles Evans, who said there was a high hurdle to raising rates in April, given low inflation. The S&P and Dow are on pace for quarterly gains of about 1 percent or more, with the Dow tracking for its biggest quarterly recovery since 1933.

On oil front, U.S. crude oil futures settled up 0.1 percent at $38.32 a barrel. While an increase in U.S. oil stockpiles kept inventories at the highest level since 1930, government data showed U.S. refineries processed the most crude since January. Apple rose 1.75 percent after Cowen & Co raised its rating on the stock to "outperform." The stock gave the biggest boost to the S&P 500 and the Nasdaq. The Dow Jones Industrial Average rose 83.55 points, or 0.47 percent to 17,716.66 points and the S&P 500 added 8.94 points, or 0.44 percent to 2,063.95. The Nasdaq Composite gained 22.67 points, or 0.47 percent to 4,869.29.

source: TA Securities – 31/03/2016