KLCI likely to extend gains on global equity cheer

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KUALA LUMPUR (Jan 23): The FBM KLCI is likely to cap the week on a firmer note today following the stronger overnight close at Wall Street and European markets.

Wall Street jumped 1.5 percent and European shares climbed to a seven-year high on Thursday as world markets cheered the European Central Bank's new stimulus program, worth more than 1 trillion euros, while the euro slipped to an 11-year low, according to Reuters.

Investors readying for a rise in global liquidity initially lifted U.S. Treasuries, whose relatively rich yields grew more attractive with prospects of lower euro zone bond yields, before prices turned lower, it said.

AllianceDBS Research in its evening edition Thursday said that supported by the previous day’s high close at the 1,770.09 level which was driven by last minute selective buying activity, the FBM KLCI had on Jan 22 traded higher to a high of 1,787.91 as market participants continued to play on the buying side in anticipation of a higher market.

It said under the stronger supportive buying interest, the benchmark index kept its position firm throughout of the trading sessions before settling at 1,781.75 (+11.66, +0.66%).

“In the broader market, gainers outnumbered losers with 664 stocks ending higher and 253 stocks finishing lower. That gave a market breadth of 2.62 indicating the bulls were in control,” it said.

AllianceDBS Research said the crossover of 1,770 level on Jan 22 was not a surprise especially with the buying activity at the resistance level of 1,770.09 in the previous day.

It said the ability of the benchmark index to keep its low above the 1,770 level had helped to create trading opportunity for risk taking market participants.

The research house said the resistance zone was pegged between 1,790 and 1,800.

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

“The analysis of overall market action on Jan 22 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,787.91 level on Jan 23,” said AllianceDBS Research.