KLCI seen extending loss on weaker sentiment

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KUALA LUMPUR (June 3): The FBM KLCI is likely to extend its loss today on weaker local investor sentiment and the lower overnight close at Wall Street.

U.S. stocks edged down on Tuesday while the dollar fell and bond yields rose as investors sought clarity on Greece's debt crisis and awaited the U.S. jobs report, according to Reuters.

The U.S. dollar was on track for its biggest one-day percentage decline against a basket of major currencies in nearly two years while the euro rose on expectations that Greece would reach a deal with its creditors, it said.

AllianceDBS Research in its evening edition Tuesday said that despite the down close in the preceding day, the FBM KLCI had on June 2 traded within previous day’s range to form an inside day bar as market participants decided not to stage a strong follow through selling pressure.

The research house said the benchmark index was swinging between the red and green zone throughout the trading sessions before settling at 1,741.37 (- 2.04, - 0.12%).

“In the broader market, gainers outnumbered losers with 571 stocks ending higher and 262 stocks finishing lower. That gave a market breadth of 2.17 indicating the bulls were in control,” it said.

AllianceDBS Research said the benchmark index dipped below the 1,740 level again on June 2 in an attempt to gauge the availability of selling pressure.

“The market did not go far down as sellers chose to be conservative on the selling side after the recent “straight” line decline from the high of 1,823 (May 18) to the low of 1,732 (June 1).

“This inside day bar was seen a relief to many market participants as the benchmark index has lost 91 points in the last 10 market days.

“Given the down close on June 2, the market is seen to be looking to form a base between 1,732 and 1,745,” it said.  

The research house however said that a close below 1,740 would put pressure on the market down to the subsequent support at 1,700.

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

“The analysis of overall market action on June 2 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,736.57 level on June 3,” said AllianceDBS Research.