KLCI to drift lower in line with global markets

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KUALA LUMPUR (April 30): The FBM KLCI is expected to drift lower today in line with the overnight dip at most global markets on weaker corporate results and lower US economic growth.

Stock markets worldwide fell on Wednesday after weak corporate results and data showing U.S. economic growth braked more sharply than expected in the first quarter, while the dollar pared losses after a Federal Reserve policy statement, according to Reuters.

Commerce Department data showed U.S. gross domestic product expanded at an only 0.2 percent annual rate, marking the weakest reading in a year and depressing U.S. shares, it said.

AllianceDBS Research in its evening edition Wednesday said the FBM KLCI had on April 29 broken the 1,846 support to reach a low of 1,842.84 as market participants continued to play on the selling side in anticipation of a lower market.

The research house said that in the absence of stronger supportive buying interest, the benchmark index kept its position near the low end throughout the trading sessions before settling near the day’s low at 1,842.93 (- 12.13 , - 0.65%).

“In the broader market, gainers outnumbered losers with 410 stocks ending higher and 407 stocks finishing lower. That gave a market breadth of 1.007 indicating the bulls and bears were closely matched,” it said.

AllianceDBS Research said the market witnessed another sell-off on April 29.

The research house said sellers were still the dominant force in the game play as market participants with winning trades continued to lock in another portion of their stock gains.

“Given the downside breakout of 1,846 coupled with a weak down close, the benchmark index is expected to test a lower level again with immediate support at 1,836.

“A downside violation of 1,836 would put pressure on the market down to the subsequent support at 1,823. The hurdle is at 1,863,” it said.

The research house said that indicator wise, the MACD was below the 9-day moving average line.

“The analysis of overall market action on April 29 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,842.84 level on April 30,” said AllianceDBS Research.