KLCI to tick higher, immediate hurdle at 1,760

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KUALA LUMPUR (June 1): The FBM KLCI is expected to tick higher today on sustained buying momentum immediate hurdle at 1,760 as investors at the local bourse appeared to have shrugged off the initial shock from the government’s move to cancel several mega-projects as part of its cost saving measures.

Investor concerns over U.S. trade policy overshadowed worries about political instability in Italy, driving equity prices lower on Thursday, according to Reuters.

Equity indexes around the world fell after the United States said it would impose tariffs on aluminum and steel imports from Canada, Mexico and the European Union and Washington's allies took steps to retaliate against U.S. goods, it said.

The Dow Jones Industrial Average fell 251.94 points, or 1.02 percent, to 24,415.84, the S&P 500 lost 18.74 points, or 0.69 percent, to 2,705.27 and the Nasdaq Composite dropped 20.34 points, or 0.27 percent, to 7,442.12, said Reuters.

AllianceDBS Research in its evening edition Thursday said despite the down close in the preceding day, the FBM KLCI had on May 31 traded within previous day’s range to form an inside day bar as market participants chose to play on the buying side.

It said under the persistent buying interest, the benchmark index was in the green throughout the trading sessions before rebounding to settle at 1,740.62 (up 21.34 points or 1.24%).

“In the broader market, gainers outnumbered losers with 581 stocks ending higher and 409 stocks finishing lower. That gave a market breadth of 1.42 indicating the bulls were in better control,” it said.

AllianceDBS Research said the market saw no immediate follow through selling pressure on May 31 with buyers and sellers were in a balanced position.

“This can be seen from the formation of the inside day bar which indicated a pause in the game play.

“A buying attempt was initiated on the opening bell after the positive external market development.

“However, the buying support fizzled out in the area of 1,754.44. This gave rise a chance to those market participants that missed out the selling opportunity on 30 May 2018 to sell into strength,” it said.

The research house said that as the number of willing sellers exceeded the number of willing buyers, the market came under pressure to move down to a low of 1,725.16.

It said following the up close on May 31, there should be buying attempt with immediate hurdle at 1,760.

It said a crossover of 1,760 would see the market gearing toward filling the downside gap left behind on May 30. 

“The analysis of overall market action on May 31 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,754.44 level on June 1,” said AllianceDBS Research.

Based on corporate announcements and news flow yesterday, stocks in focus today may include: IGB Bhd, Affin Bank Bhd, Malaysian Resources Corp Bhd, Gamuda Bhd, Hartalega Holdings Bhd, Malaysian Airports Holdings Bhd, Dialog Group Bhd, YTL Corp Bhd, AMMB Holdings Bhd, Astro Malaysia Holdings Bhd, PPB Group Bhd, Hap Seng Consolidated Bhd, DRB-Hicom Bhd, My EG Services Bhd, Parkson Holdings Bhd, Mah Sing Group Bhd and RHB Bank Bhd.