KUALA LUMPUR (Jan 12): The FBM KLCI is expected to trend sideways today with immediate support at 1,813, with oil and gas-related stocks seen in focus with firm crude oil prices.
The euro jumped against the dollar on Thursday as the European Central Bank signalled it could begin to wind down its 2.5-trillion euro stimulus program this year, while oil prices hit their highest since 2014 on tightening crude stocks, lifting energy shares, according to Reuters.
Oil prices retreated from big gains on Thursday, but still managed to settle at three-year highs after the global Brent benchmark hit $70 a barrel on signs of tightening supply in the United States.
Brent crude futures settled 6 cents higher at $69.26 a barrel, after hitting $70.05 a barrel during the session, its highest level since November 2014. Brent's settlement still represents a three-year closing high.
U.S. Treasury yields fell after China disputed a report that its government officials had recommended the country slow or halt its purchases of the U.S. bonds. The Bloomberg News report had lifted yields on the 10-year government bond to a 10-month high on Wednesday, it said.
The Dow Jones Industrial Average rose 106.63 points, or 0.42 percent, to 25,475.76, the S&P 500 gained 9.1 points, or 0.33 percent, to 2,757.33 and the Nasdaq Composite added 26.87 points, or 0.38 percent, to 7,180.44, said Reuters.
AllianceDBS Research in its evening edition Thursday said that dampened by the down close in the preceding day, the FBM KLCI had on Jan 11 dipped below 1,813 to an intraday low of 1,812.78 as market participants continued to play on the selling side in anticipation of a lower market.
It said under the persistent selling interest, the benchmark index was in the red throughout most of the trading sessions before settling off the day’s low at 1,816.88 (down 6.04 points or 0.33%).
“In the broader market, losers outnumbered gainers with 781 stocks ending lower and 265 stocks finishing higher. That gave a market breadth of 0.34 indicating the bears were in control,” it said.
AllianceDBS Research said the market made a lower low again on Jan 11 after hitting the highest high of 1,840.35 since May 5, 2015 on Jan 9.
“Market participants apparently were still unwilling to play a buying game at this juncture for fear of further decline.
“The fall to the low of 1,812.78 on Jan 11 was due to the change of stock trading behaviour from conservative to aggressive and also the willingness of the sellers to lower their offers to chase the next available buyers in line.
“Given the downside violation of the 1,813 level on an intraday basis, many market participants were believed to be worrying now that those sellers who wanted to liquidate their stock positions earlier but did not get their selling orders done may turn panic and send the benchmark index lower later,” it said.
The research house said while it is not an easy task to foresee whether the 1,813 level could hold or be broken on the downside, but it will not be a bad idea to remain patient, follow the rules and be objective about the market.
It said following the down close on Jan 11, there should be selling attempt again with immediate support at 1,813.
It said a downside breakout of 1,813 would put pressure on the market down to the subsequent support at 1,800.
“The analysis of overall market action on Jan 11 revealed that buying power was weaker than selling pressure.
“As such, the FBM KLCI would likely trade below the 1,812.78 level on Jan 12,” said AllianceDBS Research.
Based on corporate announcements and news flow yesterday, companies in focus today may include: LBS Bina Group Bhd, Ta Ann Holdings Bhd, R&A Telecommunication Group Bhd, Uzma Bhd, Atlan Holdings Bhd, Amtek Holdings Bhd, HLT Global Bhd, CIMB Group Holdings Bhd and Berjaya Assets Bhd.