KUALA LUMPUR (Oct 6): The FBM KLCI is set to trade range bound with support seen at the 1,754-level.
Investor optimism over U.S. tax reforms and the global economy spurred Wall Street and world stock markets to fresh highs on Thursday, while the dollar gained as data pointed to solid U.S. economic growth, according to Reuters.
The Dow, S&P 500 and Nasdaq stock indexes notched record-high closes for a fourth consecutive day, as did MSCI's gauge of equity markets in 47 countries, as rosy economic data and budding signs U.S. tax reform legislation will pass cheered investors, it said.
The Dow Jones Industrial Average rose 113.75 points, or 0.5 percent, to end at 22,775.39. The S&P 500 gained 14.33 points, or 0.56 percent, to 2,552.07 and the Nasdaq Composite added 50.73 points, or 0.78 percent, to 6,585.36, said Reuters.
AllianceDBS Research in its evening edition Thursday said despite the up close in the preceding day, the FBM KLCI had on Oct 5 traded lower to 1,757.61 as market participants decided not to stage a follow through buying pressure.
It said in the absence of stronger buying interest, the benchmark index was in the red zone throughout the trading sessions before settling near the day’s high at 1,759.09 (down 2.75 points or 0.16%).
“In the broader market, gainers outnumbered losers with 487 stocks ending higher and 360 stocks finishing lower. That gave a market breadth of 1.35 indicating the bulls were in better control,” it said.
AllianceDBS Research said the market saw selling activity on Oct 5 with the benchmark index falling to a low of 1,757.61.
“The higher high for 2 consecutive days (Oct 3 & 4) followed by a lower low on Oct 5 suggested that market participants in general were still not expecting a swift reversal to the upside.
“A consolidation platform is thus likely to be formed between 1,750 and 1,763 in the coming few days as market participants begin to analyse the risk while engaging in a tug-of-war game.
“The technical rebound on Oct 3 & 4 may be short-lived, but a market rise follows by a fall happens most of the time,” it said.
The research house said that was good enough to provide trading opportunity to the aggressive market participants.
It said following the down close on Oct 5, there should be selling attempt again with immediate support at 1,754.
“The analysis of overall market action on Oct 5 revealed that buying power was weaker than selling pressure.
“As such, the FBM KLCI would likely trade below the 1,757.61 level on Oct 6,” said AllianceDBS Research.
Based on corporate announcements and news flow yesterday, stocks in focus today may include: Sunway Construction Group Bhd, Gabungan AQRS Bhd, WCT Holdings Bhd, Favelle Favco Bhd, Yi-Lai Bhd, Aeon Credit Service (M) Bhd, Pos Malaysia Bhd, Bison Consolidated Bhd, UMW Holdings Bhd and Kuala Lumpur Kepong Bhd.