KLCI to tread cautiously as global markets eye Greece debt crisis solution

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KUALA LUMPUR (June 26): The FBM KLCI is expected to tread cautiously but stay above the 1,700-point level today as global markets remain jittery and eye the Greece debt crisis solution that requires a deal to made before June 30 to avoid a default.

Global stock markets and oil prices edged lower on Thursday on lingering worries over Greece, though a Supreme Court ruling upholding tax subsidies drove U.S. hospital stocks to record highs, according to Reuters.

Concerns over the possible impact of Greece's debt crisis on European energy demand weighed on crude prices along with weaker U.S. refined fuels, it said.

AllianceDBS Research in its evening edition Thursday said that after opening the day on a weak note, the FBM KLCI was having a hard time to find an upward direction on June 25.

The research house said the benchmark index traded sharply lower to settle at the day’s low of 1,716.81 (-14.87, -0.86) as market participants chose to play a selling game. 

“In the broader market, losers outnumbered gainers with 552 stocks ending lower and 292 stocks finishing higher. That gave a market breadth of 0.52 indicating the bears were in control,” it said.

AllianceDBS Research said the benchmark index continued to make lower low for 3 consecutive days.

“The market supportive action through last few minutes buying of selective blue chip stocks on June 24 did not help at all.

“This can be seen from the lower high and the downside breakout of 1,718 on June 25 as buyers could not find a strong conviction to buy into the market.

“Following the weak down close at 1,716.81, the benchmark index is expected to come under pressure to test lower level again with subsequent support zone pegged between 1,700 and 1,706,” it said.

The research house said the overhead resistance was at 1,735.

It said that indicator wise, the MACD was still staying marginally above the 9-day moving average line.

“The analysis of overall market action on June 25 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,716.81 level on June 26,” said AllianceDBS Research.