KUALA LUMPUR (July 2): The FBM KLCI is expected to start the second half of 2018 today cautiously after China’s factory growth slowed in June as trade tensions rose.
The official Purchasing Managers' Index (PMI) released on Saturday fell to 51.5 in June, below analysts' forecast of 51.6 and down from 51.9 in May, but it remained well above the 50-point mark that separates growth from contraction for a 23rd straight month.
Meanwhile, world stocks edged up slightly on Friday with Wall Street and European indexes rallying through the day, but overall major markets ended lower for the third straight week as U.S. trade policy took its toll on investor and business confidence, according to Reuters.
In the U.S., Nike shares ended the day up 11.1 percent to $79.68, the biggest one-day gain in nearly four years for the sportswear maker, after a strong earnings report. Nike was the biggest boost to the Dow Jones Industrial Average and the benchmark S&P 500 index, it said.
The Dow Jones Industrial Average rose 59.29 points, or 0.24 percent, to 24,275.34, the S&P 500 gained 2.32 points, or 0.09 percent, to 2,718.63 and the Nasdaq Composite added 6.62 points, or 0.09 percent, to 7,510.30, said Reuters.
AllianceDBS Research in its evening edition last Friday said the FBM KLCI had on June 29 soared to a high of 1,701.65 as market participants changed their game play pattern to buying.
It said in the absence of stronger selling interest, the benchmark index was in the green throughout most of the trading sessions before settling off the day’s high at 1,691.50 (up 25.82 points or 1.55%).
“In the broader market, gainers outnumbered losers with 474 stocks ending higher and 345 stocks finishing lower. That gave a market breadth of 1.37 indicating the bulls were in better control,” it said.
AllianceDBS Research said the market saw buying activity on the last market day of June 2018 with the benchmark index cruising its way into the 1,700 zone.
The research house said the emergence of sudden buying interest was a surprise because the market managed to recover 44 points or 84.5% (=measuring from the day’s high of 1,701 on June 29 2018 to the day’s low 1,657) of the 52 points lost (=measuring from the downside breakout point at 1,709 on June 21, 2018 to the low of 1,657 on June 28, 2018) in the midst of weak market sentiment.
“In fact, the most important part of this market run up was to pull the benchmark index further away from the risk of breaking below the 1,650 support level.
“This sudden market rise had helped to alleviate the market participants’ immediate concern and fear of a probable sell-off if supporting buying actions were not carried out in an attempt to halt the market from approaching the 1,650 level,” it said.
The research house said in addition to the above, the market surge on 29 June 2018 would likely be paving a way for the market to consolidate between the market zones, 1,650 – 1,709 in the coming few days.
It said following the up close on June 29, 2018, there should be buying attempt with immediate hurdle at 1,709.
“The analysis of overall market action on June 29, 2018 revealed that buying power was stronger than selling pressure.
“As such, the FBM KLCI would likely trade above the 1,701.65 level on July 2, July 2018,” said AllianceDBS Research.
Based on corporate announcements and news flow last Friday, stocks in focus today may include the following: Malaysia Airports Holdings Bhd, Sapura Energy Bhd, MBM Resources Bhd, Parkson Holdings Bhd and Green Packet Bhd.