KUALA LUMPUR (May 4): The FBM KLCI is expected to remain cautious today in line with the overnight fall at most global markets, as the outlook for further rate hikes by the U.S. Federal Reserve and the spectre of a trade war keeps investors on the sidelines.
World stock indexes fell on Thursday, a day after the U.S. Federal Reserve reaffirmed the outlook for more rate hikes, while bond yields slid after a surprising drop in euro zone inflation data, according to Reuters.
The Dow and benchmark S&P 500 stock indexes fell below key technical levels, with their 200-day moving averages, for the first time since early April, adding to bearish sentiment, it said.
The Dow Jones Industrial Average fell 336.06 points, or 1.4 percent, to 23,588.92, the S&P 500 lost 35.19 points, or 1.34 percent, to 2,600.48 and the Nasdaq Composite dropped 94.37 points, or 1.33 percent, to 7,006.53, said Reuters.
AllianceDBS Research in its evening edition Thursday said the FBM KLCI had on May 3 traded within previous day’s range to form an inside day bar as market participants decided not to stage an immediate follow through selling pressure.
It said in the absence of stronger buying or selling interest, the benchmark index was moving between the red and green zones throughout the trading sessions before settling off the day’s low at 1,851.80 (down 0.23 points or 0.01%).
“In the broader market, losers outnumbered gainers with 407 stocks ending lower and 382 stocks finishing higher. That gave a market breadth of 0.93 indicating the bears were in control with the bulls closely matched,” it said.
AllianceDBS Research said the market saw no follow through selling pressure on May 3 with both the buyers and sellers in a balanced position.
“This can be seen from the formation of the inside day bar which indicated a pause in the game play.
“Market participants may have not chosen to play a more aggressive selling game, but they were also seen playing conservatively on the buying side.
“In other words, market participants wanted to stay patience and be objective about the market. In fact, many market participants were waiting for a catalyst to trigger the next market move before parting their investible monies,” it said.
The research house said despite the exchange of stock positions among the market participants, the benchmark index held its position well above the 1,846 support level.
However, it said a downside violation of the 1,846 level would cast a negative impact on the market as market participants would begin to develop negative thoughts which would then put pressure on the market to go downward.
It said following the off day’s low down close on May 3, there should be buying attempt with immediate hurdle at 1,860.
“The analysis of overall market action on May 3 revealed that buying power was stronger than selling pressure.
“As such, the FBM KLCI would likely trade above the 1,856.92 level on May 4,” said AllianceDBS Research.
Based on corporate announcements and news flow yesterday, companies in focus Friday may include the following: Puncak Niaga Holdings Bhd, T7 Global Bhd, Fraser & Neave Holdings Bhd, Berjaya Assets Bhd, Priceworth International Bhd, Sunway Real Estate Investment Trust, AirAsia X Bhd and DGB Asia Bhd.