KUALA LUMPUR (July 17): The FBM KLCI is expected to start the week on a muted note as bears remain in control at the local market, despite the fresh highs scaled by most global markets last Friday.

The dollar weakened and government bond yields fell to multi-week lows on Friday after a benign reading of U.S. inflation in June and soft retail demand raised doubts the Federal Reserve would increase interest rates later this year, according to Reuters.

The Dow and S&P 500 both closed at new records while gauges of global stock markets also scaled fresh highs, capping their best week in more than two months. Oil prices rose 1 percent, it said.

The Dow Jones Industrial Average rose 84.65 points, or 0.39 percent, to 21,637.74. The S&P 500 gained 11.44 points, or 0.47 percent, to 2,459.27 and the Nasdaq Composite added 38.03 points, or 0.61 percent, to 6,312.47, said Reuters.

AllianceDBS Research in its evebing edition last Friday said that dampened by the down close in the preceding day, the FBM KLCI had on July 14 traded marginally lower to 1,751.69. In the absence of stronger selling pressure at 1,751.69, supportive buying interest chipped in to settle off the day’s low at 1,755 (up 1.22 points or 0.07).

“In the broader market, losers outnumbered gainers with 469 stocks ending lower and 369 stocks finishing higher. That gave a market breadth of 0.78 indicating the bears were in better control,” it said.

AllianceDBS Research said the market saw a weak follow through selling pressure on July 14 with the benchmark index only traded marginally lower to 1,751.69.

“This indicated that market participants were unwilling to play an aggressive selling game for fear of sudden market reversal.

“Market sentiment may have continued to be negatively affected following the downside violation of the 1,755 support level with a market settlement below 1,755 on July 13, but a closer study of the chart revealed that there is a critical market support level at 1,750 which is less than 2 points away from the low of 1,751.69 registered on July 14,” it said.

The research house said following the up close on July 14, there should be buying attempt again with immediate hurdle at 1,760.    

“The analysis of overall market action on July 14 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,751.69 level on July 17,” it said.

Based on corporate announcements and newsflow last Friday, stocks in focus today may include Lien Hoe Corp Bhd, Mlabs Systems Bdh, Ajiya Bhd, Amcorp Properties Bhd, Public Bank Bhd and Affin Holdings Bhd.