KUALA LUMPUR (Aug 7): The FBM KLCI is seen trending sideways today with immediate support at 1,764, despite the firmer overnight close at most global markets, as buying support at the local bourse is likely to be lukewarm.
Stock markets lifted on Monday after strong corporate earnings helped Wall Street close higher, but a tariff dispute between the United States and China limited gains in equities while boosting the dollar and helping keep Treasury yields lower, according to Reuters.
Sterling dropped to an 11-month low after the British trade minister warned that the nation was headed for a no-deal Brexit, stoking investor fears that Britain could soon leave the European Union without securing a trade agreement, it said.
After opening lower, all three major U.S. indexes closed higher. The Dow Jones Industrial Average rose 39.60 points, or 0.16 percent, to 25,502.18, the S&P 500 gained 10.1 points, or 0.35 percent, to 2,850.40 and the Nasdaq Composite added 47.66 points, or 0.61 percent, to 7,859.68, said Reuters.
AllianceDBS Research in its evening edition Monday said despite last Friday’s up close, the FBM KLCI had on Aug 6 formed an inside day bar as market participants decided not to stage an immediate follow through buying pressure.
It said in the absence of stronger buying or selling interest, the benchmark index was moving between the green and red zones throughout the trading sessions before settling at 1,779.75 (down 0.34 points or 0.02%).
“In the broader market, losers outnumbered gainers with 514 stocks ending lower and 333 stocks finishing higher. That gave a market breadth of 0.64 indicating the bears were in better control,” it said.
AllianceDBS Research said the inside day bar indicated a pause in the game play with both buyers and sellers seen in a balanced position.
It said a buying attempt with an opening level above the last Friday’s settlement was initiated on the opening bell, but the benchmark index did not go far up.
“This can be seen from the day’s high of 1,782.19. Over the past 21 days, the market has registered a total of 18 up closes and only 3 down closes.
“So, the lower high on Aug 6 was not a surprise since the market has not undergone a meaningful and healthy correction after the recent rise of 126 points in 18 days (measuring from the high of 1,788 on Aug 1 to the low of 1,662 on July 9).
“Moreover, many market participants were also fearful of a sudden market turnaround as the present market level is not viewed a quality trading opportunity in term of risk and reward profile,” it said.
The research house said following the down close on Aug 6, there should be selling attempt with immediate support at 1,764.
“The analysis of overall market action on Aug 6 revealed that buying power was weaker than selling pressure.
“As such, the FBM KLCI would likely trade below the 1,777.78 level on Aug 7,” said AllianceDBS Research.
Based on corporate announcements and news flow yesterday, stocks in focus today may include the following: Sime Darby Plantation Bhd, PRG Holdings Bhd, Pasukhas Group Bhd, KKB Engineering Bhd, SKH Consortium Bhd, Axis Real Estate Investment Trust, Only World Group Holdings Bhd, MCT Bhd and Advance Synergy Bhd.