KUALA LUMPUR (Feb 4): Stocks on Bursa Malaysia may remain under pressure today with the FBM KLCI trending sideways cautiously ahead of the extended Chinese Lunar New Year holidays starting this weekend.
The U.S. dollar tumbled on Wednesday after comments from a Federal Reserve official and a soft services sector report suggested a slowing pace of rate hikes, sparking a rally in oil prices that also boosted U.S. equities, according to Reuters.
U.S. crude settled up 8 percent as the weakness in the dollar helped oil and other commodities priced in the currency. U.S. Treasury yields fell to one-year lows before recovering, it said.
AllianceDBS Research in its evening edition Wednesday said the FBM KLCI had on Feb 3 gapped down to reach a low of 1,631.11 as market participants rushed to liquidate their stock positions in anticipation of a lower market.
It said under the persistent selling pressure, the benchmark index was in the red throughout the trading sessions before settling at near the day’s low 1,633.30 (down 19.88 points or 1.20%).
“In the broader market, losers outnumbered gainers with 480 stocks ending lower and 325 stocks finishing higher. That gave a market breadth of 0.67 indicating the bears were in control,” it said.
AllianceDBS Research said there was urgency on the part of market participants to unload stock positions.
“This can be seen from the downside gap of 17 points created between the previous day’s close of 1,653 and the opening level of 1,636 on Feb 3.
“With larger selling supply chasing after the smaller buying demand, the benchmark index fell to the low of 1,631.11.
“There may be a buying attempt to narrow the size of the downside gap, but strong selling supply was in good control of the game play,” it said.
The research house said following the weak down close, the market is likely to come under selling pressure again with immediate support at 1,630.
It said a fall below 1,630 would put pressure on the index down to the subsequent support at 1,620.
It said the hurdle is pegged at 1,653, adding that a crossover of 1,653 would see the market gearing towards the recent high of 1,667 (29 Jan 2016).
The research house said that indicator wise, the MACD was below the 9-day moving average line.
“The analysis of overall market action on Feb 3 revealed that buying power was weaker than selling pressure.
“As such, the FBM KLCI would likely trade below the 1,631.11 level on Feb 4,” said AllianceDBS Research.
Based on corporate announcements and filings to Bursa Malaysia today, companies that will be in focus today may include: AirAsia Bhd, RCE Capital Bhd, Comintel Corporation Bhd, Asia Media Group Bhd, Selangor Properties Bhd, My E.G. Services Bhd, Wing Tai Malaysia Bhd, Ikhmas Jaya Group Bhd, Westports Holdings Bhd, Malaysia Marine & Engineering Holdings Bhd, Public Bank Bhd and Axiata Group Bhd.