KLCI to edge up cautiously in line with Wall Street performance

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KUALA LUMPUR (June 18): The FBM KLCI is expected to edge up cautiously in line with the slightly higher overnight close at Wall Street.

The U.S. dollar slid on Wednesday while Wall Street stocks rose in volatile afternoon trading after the Federal Reserve signalled it may wait until late this year to raise interest rates, according to Reuters.

The Fed has said it would first raise rates when it deems the economy strong enough to handle it, and on Wednesday said the economy was likely strong enough to support a rate hike by the end of the year. The U.S. central bank also lowered expectations for 2015 economic growth, it said.

AllianceDBS Research in its evening edition Wednesday said that led by the up close in the preceding day, the FBM KLCI had on June 17 opened on a firmer note.

The research house said that the benchmark index subsequently traded to a high of 1,728.06 as market participants continued to play on the buying side in anticipation of a higher market.

It said that under the stronger buying support, the benchmark index was in the green throughout most of the trading sessions before settling near the day’s high at 1,726.86 (+ 4.62, + 0.27%).

“In the broader market, gainers outnumbered losers with 405 stocks ending higher and 342 stocks finishing lower. That gave a market breadth of 1.18 indicating the bulls were in control,” it said.

AllianceDBS Research said that the market went on to register a higher high on June 17.

It said the supportive buying interest was believed to be owing to the expectation of an imminent technical rebound after losing 149 points lost or 7.98% measuring from the high of 1,867 (April 27) to the low of 1,718 (June 16) over the past 34 days.

“The up close in the last 2 days seemed to have signalled the intention of certain market participants to build another platform between 1,718 and 1,745 although the benchmark index had failed to establish a consolidation platform between 1,727 and 1,752 earlier.

“However, the benchmark index must first overcome the small resistance selling zone between 1,727 and 1,733,” it said.

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

“The analysis of overall market action on June 17 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,728.06 level on June 18,” said AllianceDBS Research.