KUALA LUMPUR (Dec 3): The FBM KLCI is expected to remain lacklustre today in line with the weaker overnight close at Wall Street and the mixed end at most other global markets.
The FBM KLCI, however, may surprise observers given the likelihood of some year-end window activities, but will trend lower if external factors override sentiments.
The dollar strengthened on Wednesday and stocks fell on Wall Street, as Federal Reserve (Fed) Chair Janet Yellen signalled a readiness to hike interest rates and US data indicated a solid labor market, according to Reuters.
Yellen said she was "looking forward" to a US rate hike that will be seen as a testament to the economy's recovery from recession, although she did not indicate if she still expected a hike would be warranted at the Fed's last policy meeting of the year on Dec 15–16, 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 Dec 2 traded higher at 1,686.36 as some market participants continued to play on the buying side in anticipation of a higher market.
The research house, however, said non-follow through buying interest in the area of 1,686.36 prompted profit-taking activity to kick in.
It said this pushed the benchmark index down to settle at the day's low of 1.676.77 (down 5.6 points or 0.33%).
"In the broader market, losers outnumbered gainers with 426 stocks ending lower and 423 stocks finishing higher. That gave a market breadth of 0.99 indicating the bulls and bears were fighting hard for control of the game," it said.
AllianceDBS Research said the higher high on Dec 2 may have indicated the presence of buying support, but the inability of the benchmark index to keep its position on a positive note throughout the trading sessions pointed to the reluctance on the part of buyers to play a more aggressive buying game at this juncture, even though the benchmark index had been holding well above the 1,670 level in the last eight days.
"With the day's high of 1,686.36 only less than two points away from the 1,688 resistance, the buyers apparently have chosen to lock in a portion of their trading profits in the absence of positive catalyst to trigger the next up move," it said.
The research house said given the down close, the benchmark index would continue to move between 1,660 and 1,668 in the coming few days until a breakout is seen.
It said that indicator wise, the MACD was above the nine-day moving average line.
"The analysis of overall market action on Dec 2 revealed that buying power was weaker than selling pressure.
"As such, the FBM KLCI would likely trade below the 1,676.77 level on Dec 3," said AllianceDBS Research.