KLCI to stay listless as global markets dip

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KUALA LUMPUR (Dec 9): The FBM KLCI is expected to remain listless today in tandem with the weaker overnight close at US and European markets as worries over global growth took centrestage and drove markets lower.

U.S. and European stocks fell on Monday after weak Chinese and Japanese data stoked worries about slowing global economic growth, while oil prices sank to five-year lows on expectations of oversupply into 2015, according to Reuters.

The S&P 500 posted its biggest daily percentage drop since Oct. 22 on Monday as oil's slump to a five-year low caused a selloff in energy shares.

Worries about global growth added to the bearish tone. Data showed China's exports grew at a slower-than-expected pace and imports dropped in November, while Japan's economy shrank more than expected in the third quarter, said Reuters.

AllianceDBS Research in its evening edition Monday said despite the up close in last Friday, the FBM KLCI did not see follow through buying activity after the opening bell on Dec 8.

It said the non-follow through buying interest prompted a change of game play to selling and this had pushed the benchmark index down to a low of 1,735.92 before settling off the day’s low at 1,740.84 (- 8.53 , - 0.49%).

“In the broader market, losers outnumbered gainers with 539 stocks ending lower and 258 stocks finishing higher. That gave a market breadth of 0.47 indicating the bears were in control,” it said.

AllianceDBS  Research said the lower low followed by a down close on Dec 8 indicated that sellers were in control of the game.

It said the fear of the market capability to sustain its position above the 1,740 level was believed to be the reason behind of the non-follow through buying after the opening bell.

“In fact, the lack of buying confidence in the market explained why many market participants remain on the sidelines.

“The benchmark index may have lost 110 points over the last 8 days measuring from the high of 1,845 (Nov 27, 2014) to the low of 1,735 (Dec 8, 2014), but that did not give an automatic ticket for a technical rebound,” it said.  

The research house said following the down close on Dec 8, the market was likely to test the lower support zone of 1,730.

It said the overhead resistance was at 1,769, adding that indicator wise, the MACD was below the 9-day moving average line.

“The analysis of overall market action on Dec 8 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,735.92 level on Dec 9,” said AllianceDBS Research.