KUALA LUMPUR (Feb 5): The FBM KLCI is expected to sustain its momentum and trend higher today in line with the overnight advance at most global markets.
Global equity markets rose on Thursday as diminished expectations of U.S. interest rate hikes this year pushed the dollar lower, which in turned boosted the prices of many commodities, according to Reuters.
The dollar fell for a fourth day on the latest batch of soft U.S. data, while comments from a U.S. Federal Reserve policymaker on Wednesday were viewed as a sign further rate hikes could be delayed, it said.
AllianceDBS Research in its evening edition Thursday said despite the weak down close in the preceding day, the FBM KLCI had on Feb 4 turned its position around to fill the downside gap left behind on Feb 3 after opening the day on a firm note.
It said the benchmark index subsequently traded to a high of 1,656.82 as market participants chose to play a buying game in anticipation of a higher market.
The research house said in the absence of strong selling interest, the benchmark index was in the green throughout the trading sessions before settling near the day’s high at 1,656.77 (up 23.47 points or 1.44%).
“In the broader market, gainers outnumbered losers with 512 stocks ending higher and 341 stocks finishing lower. That gave a market breadth of 1.50 indicating the bulls were in control,” it said.
AllianceDBS Research said the downside gap coupled with the weak down close on Feb 3 were supposed to be negative enough to pressure the market lower on Feb 4.
“However, a change of game play pattern on Feb 4 was observed as market participants decided to take the chance to play on the buying side.
“Following the closure of the downside gap a positive development for the market is believed to be underway in the coming few days with immediate hurdle pegged at 1,667.
“Moreover, the closure of the downside gap was accompanied by higher market volume on 4 Feb 2016. These 2 positive conditions should provide the momentum for the market to test higher again,” it said.
The research house said a crossover of 1,667 could lift the benchmark index to the subsequent resistance zone, 1,687 – 1,700.
It said market support is at 1,630, adding that a fall below 1,630 would pressure the market down to the subsequent support at 1,620.
It said that indicator wise, the MACD was above the 9-day moving average line.
“The analysis of overall market action on Feb 4 revealed that buying power was stronger than selling pressure.
“As such, the FBM KLCI would likely trade above the 1,656.82 level on Feb 5,” said AllianceDBS Research.
Based on corporate newsflow and announcements yesterday, companies that will be in focus today may include: Raya International Bhd, SapuraKencana Petroleum Bhd, MKH Bhd, Dialog Group Bhd, Technodex Bhd, Amcorp Properties Bhd, Acoustech Bhd, AirAsia Bhd, Astro Malaysia Holdings Bhd, Mega First Corporation Bhd and Maxis Bhd.