KUALA LUMPUR (June 21): The FBM KLCI is expected to extend its losses today and drift below the 1,780-point level, in line with the tepid overnight close at most global markets.

World stock markets fell on Tuesday as a drop in oil prices weighed on the energy sector, while hawkish comments from several U.S. Federal Reserve officials pushed the U.S. dollar to a one-month high, according to Reuters.

Oil fell about 2 percent, with Brent settling at seven-month lows and U.S. crude at its cheapest since September, after increased supply from several key producers overshadowed high compliance by OPEC and non-OPEC oil producers with a deal to cut global output, it said.

Meanwhile, the Dow Jones Industrial Average fell 61.85 points, or 0.29 percent, to 21,467.14, the S&P 500 lost 16.43 points, or 0.67 percent, to 2,437.03 and the Nasdaq Composite dropped 50.98 points, or 0.82 percent, to 6,188.03, said Reuters,

The Dow and benchmark S&P 500 hit fresh records on Monday, buoyed by a rebound in the tech sector, it said.

AllianceDBS Research in its evening edition Tuesday said that dampened by the down close in the preceding day, the FBM KLCI had on June 20 broken the 1,781 support to settle at the day’s low of 1,780.71 (down 8.19 points or 0.46%) as market participants continued to play a selling game in anticipation of a lower market.

It said that in the broader market, losers outnumbered gainers with 544 stocks ending lower and 311 stocks finishing higher.

“That gave a market breadth of 0.57 indicating the bears were in control,” it said.

AllianceDBS Research said the market saw follow through selling pressure on June 20 which took the benchmark index lower.

“Given the buying struggle in the area of 1,795 over the past few days and potential resistance selling interest at 1,800, market participants apparently had taken the chance to play on the selling side.

“With no immediate supportive buying interest in sight, the benchmark index fell below the 1,781 support to a low of 1,780.71,” it said.

The research house said this simply explained that supply forces were greater than the demand forces.

It said the downside violation of the 1,781 level would be triggering a sell signal for those follow the rules of technical analysis.

AllianceDBS Research said following the down close on June 20, there should be selling attempt again with subsequent support at 1,775.

“The analysis of overall market action on June 20 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,780.71 level on June 21,” said AllianceDBS Research.

Based on corporate announcements and news flow today, stocks in focus on Wednesday (June 21) may include: Selangor Dredging Bhd, Berjaya Sports Toto Bhd, Malakoff Corp Bhd, Sapura Resources Bhd, Destini Bhd, Axiata Group Bhd, Lay Hong Bhd, Astro Malaysia Holdings Bhd, Scientex Bhd, CCM Duopharma Biotech Bhd, Top Glove Corp Bhd, Puncak Niaga Holdings Bhd and Ire-Tex Corp Bhd.