KLCI likely to be soggy on weaker global equities

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KUALA LUMPUR (Jan 28): The FBM KLCI is likely to experience a soggy day today in line with the overnight slump at most global markets, despite analysts’ views that the local index may trade higher.

World stock indexes fell on Tuesday following disappointing company earnings, while the dollar retreated after an unexpected decline in U.S. durable goods orders, according to Reuters.

All three major U.S. stock indexes ended more than 1 percent lower, with shares of Microsoft, down 9.3 percent, and Caterpillar, down 7.2 percent, leading the way down, it said.

Their results were among the latest disappointments in the current U.S. earnings period, which has raised worries about the profit picture given the recent slump in oil prices, weaker global demand and the stronger dollar, said Reuters.

AllianceDBS Research in its evening edition Tuesday said the FBM KLCI had on Jan 27 opened on a weak note, but it reversed its position to reach a high of 1,810.21 as market participants chose to play on the buying side.

It said that under the supportive buying activity, the benchmark index kept its position firm throughout most of the trading sessions before settling at 1,803.17 (+6.73, +0.37%).

“In the broader market, gainers outnumbered losers with 447 stocks ending higher and 366 stocks finishing lower. That gave a market breadth of 1.22 indicating the bulls were in control,” it said.

AllianceDBS Research said the benchmark index traded lower on Jan 27, but the upside gap left behind on Jan 23 remained unfilled.

The research house said this showed that market participants were unwilling to play an aggressive selling game at this juncture in view of the positive momentum created in recent days.

It said given the up close on Jan 27, new attempts to test the 1,810 hurdle again can be expected with immediate support seen at 1,787.

It said a decisive crossover of 1,810 should see the benchmark index gearing towards the next resistance zone, 1,820 – 1,830.

Indicator wise, the MACD is above the 9-day moving average line, it said.

“The analysis of overall market action on Jan 27 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,810.21 level on Jan 28,” said AllianceDBS Research.