Supermax up, oil down as US-China spat, Covid-19 dictate sentiment

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KUALA LUMPUR (May 28): The FBM KLCI settled down 0.98 point at 1,450.75 during Bursa Malaysia’s afternoon break today, though share prices of glove manufacturers including Supermax Corp Bhd rose possibly on news that the US Covid-19 death toll surpassed 100,000.

Investors were also mindful of the US-China tensions, the impact of which was apparent on crude oil prices, according to news reports.

In Malaysia today, TA Securities Holdings Bhd wrote in a note that the local market should, however, slip back into profit-taking consolidation mode, given the overbought momentum after recent gains and elevated US-China geopolitical tensions clouding the market tone.

"Immediate support for the index (KLCI) stayed at last Friday's low of 1,435, followed by the rising 10-day moving average level at 1,418, then 1,400, and next the 30-day and 50-day moving average levels respectively at 1,393 and 1,363. Overhead resistance will be from yesterday's high at 1,458, with the next significant hurdle at 1,480,” TA said.

At 12:30pm today, the KLCI settled lower after rising to its highest so far today at 1,457.64. During the break, Bursa’s healthcare index, which includes rubber glove manufacturers, ended up 1.66%, while the energy gauge, which tracks shares in oil and gas (O&G) companies, fell 2.27%.

Across Bursa, there were 3.72 billion shares worth RM2.46 billion traded. There were 621 decliners and 328 gainers.

Top decliners included O&G-related companies Petronas Dagangan Bhd (PetDag) and Petron Malaysia Refining & Marketing Bhd. 

Leading gainer was Supermax after the stock’s price settled up 52 sen or 7.54% at RM7.42. With a volume of some 45 million shares, Supermax also emerged among Bursa’s most active stocks.

Globally, it was reported that Asian shares and US stock futures rose today as growing optimism about a global economic recovery from the Covid-19 pandemic trumped immediate concerns about a stand-off between the US and China over Hong Kong.

It was reported that, however, the biggest risk to equities was the Sino-US relationship, which was likely to worsen after US Secretary of State Mike Pompeo said Hong Kong no longer warranted special treatment under US law.

"Pompeo said overnight that China had undermined Hong Kong's autonomy so fundamentally that the territory no longer warranted special treatment, a potentially big blow to the city's status as a financial hub. Some investors worry a punitive US response to China on the issue of Hong Kong could result in a tit-for-tat reaction from Beijing, further straining ties between the world's two biggest economies and further hobbling global growth.

"Sources have said the US government may suspend Hong Kong's preferential tariff rates for exports to the US, a far less severe response than formally revoking Hong Kong's special status under US law. President Donald Trump said he will announce a response to China's policies towards Hong Kong later this week. Oil futures took a beating as investors fretted about Trump's response to China. US crude dipped 3.41% to US$31.69 (RM138.12) a barrel. Brent crude fell 1.76% to US$34.13 per barrel,” Reuters reported.