KUALA LUMPUR (June 7): The FBM KLCI is seen moving higher today, with resistance zone at 1,793 – 1,800 in line with the overnight gains at most global markets.
The euro rose to a nearly two-week high while the 10-year U.S. Treasury yield hit a 1-1/2-week peak on Wednesday after officials said the European Central Bank could wind down its stimulus program by the end of the year, according to Reuters.
Robust growth is making the central bank increasingly confident that inflation is on its way back to target, ECB chief economist Peter Praet said on Wednesday, raising the likelihood it may use a meeting next week to reveal more about the end of its bond-buying program, it said.
The Dow Jones Industrial Average rose 346.41 points, or 1.4 percent, to 25,146.39, the S&P 500 gained 23.55 points, or 0.86 percent, to 2,772.35 and the Nasdaq Composite added 51.38 points, or 0.67 percent, to 7,689.24, said Reuters.
AllianceDBS Research in its evening edition Thursday said despite the down close in the preceding day, the FBM KLCI had on June 6 filled the downside gap left behind on May 30 with a high of 1,778.47 as market participants chose to play on the buying side.
It said under the persistent buying interest, the benchmark index was in the green throughout most of the trading sessions before settling near the day’s high at 1,777.13 (up 21.99 points or 1.25%).
“In the broader market, gainers outnumbered losers with 716 stocks ending higher and 267 stocks finishing lower. That gave a market breadth of 2.68 indicating the bulls were in control,” it said.
AllianceDBS Research said the market saw buying activity on June 6 with the benchmark index crossing over the 1,760 hurdle to reach a high of 1,778.47.
“A selling attempt was made on the opening bell, but the market did not go far down.
“The ability of the benchmark index to hold its position above the 1,750 level somehow gave a chance to the aggressive market participants to establish stock positions.
“This pulled the benchmark index back up into the 1,770 zone. At a day’s high of 1,778.47, the downside gap left behind on 30 May 2018 is now filled,” it said.
The research house said the closure of the downside gap suggested that the market rise on June 6 was not due to the lack of selling interest but the presence of greater buying demand.
It said this can be seen from the higher market volume of 3.50 billion shares on June 6 compared to the 2.73 billion shares recorded on June 5.
It said following the up close on June 6, there should be buying attempt with resistance zone, 1,793 – 1,800.
“The analysis of overall market action on June 6 revealed that buying power was stronger than selling pressure.
“As such, the FBM KLCI would likely trade above the 1,778.47 level on June 7,” said AllianceDBS Research.
Based on the corporate announcements and news flow yesterday, companies in focus today may include: WCT Holdings Bhd, Aeon Co (M) Bhd, Dagang NeXchange Bhd, Kimlun Corporation Bhd, AE Multi Holdings Bhd, Astro Malaysia Holdings Bhd, Chin Hin Group Bhd, Telekom Malaysia Bhd and JAKS Resources Bhd.