KLCI to trend lower on weaker US lead

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KUALA LUMPUR (April 2): The FBM KLCI is expected to trend lower today on the back of the poorer overnight showing at Wall Street as well as on lack of fresh local catalysts.

U.S. stocks fell for a second day on Wednesday and the dollar dipped after weak U.S. private sector employment and manufacturing data fed worries about theU.S. economy ahead of a highly anticipated jobs report Friday, according to Reuters.

Oil futures rallied as U.S. crude output fell for the first time in two months and the government said stockpiles grew less than some had feared. Also, Iran nuclear talks dragged on, making traders less nervous about a possible supply boost, it said.

The Dow Jones industrial average fell 78.2 points, or 0.44 percent, to 17,697.92, the S&P 500 lost 8.2 points, or 0.4 percent, to 2,059.69 and the Nasdaq Composite  dropped 20.66 points, or 0.42 percent, to 4,880.23, said Reuters.

AllianceDBS Research in its evening edition Wednesday said despite the 1,830.78 settlement in the preceding day, the FBM KLCI had on April 1 fallen back below the 1,830 level as market participants changed their game play pattern from buying (31 Mar 2015) to selling.

It said that under the stronger selling interest, the benchmark index fell to a low of 1,823.61 before settling off the day’s low at 1,826.31 (-4.47, -0.24%).

“In the broader market, losers outnumbered gainers with 478 stocks ending lower and 291 stocks finishing higher. That gave a market breadth of 0.60 indicating the bears were in control,” it said.

AllianceDBS Research said the fall back below the 1,830 level on April 1 indicated that market participants were reluctant to play a more aggressive buying game as the 1,830 level was viewed as a psychological hurdle.

It said the close at 1,830.78 in a single day on March 31 may be seen as an initial sign of paving the way for the benchmark index to test higher ground, but it was not sufficient to confirm anything.

The research house said that in general, it was necessary to see the market settle above the hurdle for 3 consecutive days in order to strengthen buying conviction.

It said the market resistance remains at 1,830 with immediate support at 1,812, adding that a fall below 1,812 would put pressure on the benchmark index down to the subsequent support at 1,800.

Indicator wise, the MACD is above the 9-day moving average line, it said.

“The analysis of overall market action on April 1 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,823.61 level on April 2,” said AllianceDBS Research.