KLCI to extend gains, stay above 1,800-point level

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KUALA LUMPUR (May 18): The FBM KLCI is extend its gains today and stay above the 1,800-point level in line with the record closing high at Wall Street last Friday.

Treasury yields dropped and the dollar eased on Friday following a stabilisation in European government bonds and another batch of weak U.S. data that raised expectations the Federal Reserve will need to wait longer to hike interest rates, according to Reuters.

U.S. stocks finished near flat, though the S&P 500 eked out another record closing high and major indexes posted gains for the week. The MSCI World equity index gained 0.26 percent and was up for the week as well, it said.

AllianceDBS Research in its evening edition last Friday said that despite the up close in the preceding day, the FBM KLCI had on May 15 traded lower to 1,802.05 as market participants decided not to stage an immediate follow through buying.

However, it said bargain hunting buying interest chipped in post afternoon session to lift the market back up to close at the day’s high of 1,811.92 (+4.37, +0.24%) ahead of weekend.

“In the broader market, gainers outnumbered losers with 411 stocks ending higher and 358 stocks finishing lower. That gave a market breadth of 1.14 indicating the bulls were in control,” it said.

AllianceDBS Research said the lower low followed by the higher high on May 15 indicated that buyers in better control over the sellers.

The research house said given the day high settlement on May 15, the market is expected to test higher level with immediate hurdle at 1,814.
“A rise above 1,814 should see the benchmark index gearing towards the next resistance at 1,823.

“The support zone is pegged between 1,795 and 1,800,” 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 May 15 revealed that buying power was than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,811.92 level on May 18,” said AllianceDBS Research.