KLCI to trend marginally higher

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KUALA LUMPUR (May 11): The FBM KLCI is expected to trend marginally higher today on the back of the recovery of the global bond markets which had boosted Wall Street last Friday.

An April rebound in U.S. jobs growth boosted Wall Street and supported the dollar on Friday, while a surprise Conservative victory cast away fears of a hung British Parliament and sparked a rally in sterling and European stock markets, according to Reuters.

Global bond markets recovered for a second day, focusing on weak aspects of the latest U.S. jobs report, which may cause the Federal Reserve to be even more cautious toward ending its near- zero interest rate policy later this year, it said.

AllianceDBS Research in its evening edition last Friday said despite the weak day’s low close in the preceding day, the FBM KLCI had on May 8 traded within previous day’s range to form an inside day bar as market participants decided not to stage an immediate follow through selling pressure.

The research house said that in the absence of stronger selling interest, the benchmark index kept its position in the green throughout the trading sessions before settling at 1,807.65 (+ 2.55, + 0.14%).

“In the broader market, gainers outnumbered losers with 461 stocks ending higher and 316 stocks finishing lower. That gave a market breadth of 1.45 indicating the bulls were in control,” it said.

AllianceDBS Research said that having lost 62 points over the past 7 days [1,863 (April 27) minus 1,805 (May 7)], the benchmark index took a pause on May 8 in view of its proximity to the 1,800 psychological level.

The research house said sellers apparently had chosen not to be aggressive in their selling game on May 8.

“This provided opportunity for risk taking market participants to establish stock positions at lower level in anticipation of a technical rebound. 

“Following the up close on May 8, the market is expected to test higher level with immediate hurdle seen at 1,818,” said the research house.

AllianceDBS Research a crossover of 1,818 should see a test of next overhead resistance at 1,824.

It said that indicator wise, the MACD was below the 9-day moving average line.

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

“As such, the FBM KLCI would likely trade above the 1,814.28 level on May 11,” said AllianceDBS Research.