KLCI to cautiously trend higher, test 1,850-level

-A +A

KUALA LUMPUR (April 6): The FBM KLCI is expected to cautiusly test the 1,850-point today, building on its momentum from last week, although sentiment could be somewhat subdued on the back the of weaker-than-expected US jobs data last week.

At the global markets, U.S. Treasuries prices rallied, the U.S. dollar fell and stock index futures fell on Friday after weaker-than-expected March U.S. jobs data, according to Reuters.

U.S. Labor Department data showed employers added just 126,000 jobs in March, the smallest monthly increase in more than a year. The figure was well below forecasts for a gain of 245,000, according to a Reuters poll of economists, it said.

U.S. equity index futures fell nearly 1.0 percent, with S&P 500 E-mini futures dropping 19.75 points to 2039.75 in thin volume in a 45-minute abbreviated session, indicating a weak open for stocks on Monday, said Reuters.

AllianceDBS Research in its evening edition last Friday said that led by the up close in the preceding day, the FBM KLCI had on April 3 traded higher to 1,836.82 as market participants continued to play on the buying side in anticipation of a higher market.

It said that under the buying support, the benchmark index held its position near the high end throughout most of the trading sessions before settling at 1,834.52 (+2.55, +0.14%).

“In the broader market, gainers outnumbered losers with 383 stocks ending higher and 360 stocks finishing lower. That gave a market breadth of 1.06 indicating the bulls were in control with the bears closely matched,” it said.

AllianceDBS Research said the return of benchmark index to trade higher than 1,830 on April 2 continued to support buying confidence.

However, it said market participants were seen unwilling to play a more aggressive buying game, even though the 1,830 level was earlier viewed as a significant hurdle.

The research house said the lower market trading volume of 1.78 billion shares on April 3 compared to that of 2.14 billion shares on 2 Apr 2015 somehow suggested a cautious game play.

Nonetheless, it said the benchmark index should advance further with an eye to test the next hurdle at 1,845 given the underlying positive momentum.

Indicator wise, the MACD is above the 9-day moving average line, it said.

“The analysis of overall market action on April 3 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,836.82 level on April 6,” said AllianceDBS Research.