The FBMKLCI Index started the week on a stronger note amid U.S. debt deal as sentiment across the regional equities markets significantly improved.
At 9.20am, the FBM KLCI opened at 1399.51.
Maybank IB said in a note today (May 30), the benchmark index gained 1.95pts, or 0.14%, to end the session at 1,404.93pts, led by advances in PMETAL, TM, CDB and DIALOG.
Market breadth however remained negative with losers continuing to outnumber gainers by 449 to 376. A total of 2.72b shares valued at MYR1.87b changed hands.
Sharp gain in U.S. tech stocks boosted domestic sentiment as rebound in the technology sector index was extended gaining 4.8% since last week’s low.
Technically, Maybank IB expects the FBMKLCI Index to range between 1,395pts and 1,425pts today, with supports remaining at 1,380pts and 1,350pts.
RHB Retail Research said today (May 30), the FKLI’s attempt to rebound higher on Monday was short-lived as most of its gains were written off.
This resulted in the index closing below the opening level – indicating weak momentum. It settled at 1,403.50 pts – only 2 pts higher than the previous close.
Despite opening higher at 1,407 pts and climbing to the day’s high of 1,410.50 pts, the FKLI quickly reversed its momentum and fell sharply below the opening level.
It hit the day’s low of 1,400 pts before rebounding slightly at the close.
Based on the latest price action, the FKLI will likely consolidate sideways near the 1,400-pt level in the upcoming sessions, with a downward bias in the later sessions.
The medium-term downward pressure is supported by the 50-day SMA line, which is still trending lower, and the RSI momentum indicator, currently at 38% in negative territory. Hence, RHB keep to a bearish trading bias.
Traders are recommended to hold on to the short positions initiated at 1,414 pts or the close of 10 Mar. To mitigate the trading risks, the stop-loss threshold is fixed at 1,437 pts.
The nearest support remains at 1,400 pts, followed by 1,382 pts or 16 Mar’s low. On the upside, the immediate resistance stays at 1,425 pts, followed by 1,437 pts or the close of 3 Apr.
Malacca Securities opined that the FBM KLCI (+0.1%) extended its gains, driven by the positive performance across selected plantation and oil & gas heavyweights yesterday. The lower liners closed mixed, while the technology sector (+1.2%) continues to lead the mostly positive sectorial peers.
Global markets: Wall Street was closed in conjunction with the Memorial Day public holiday, while futures market is indicating a positive opening after policy makers agreed to curtail spending and raise borrowing limit.
The European stockmarkets ended mixed, while Asia stockmarkets closed mostly upbeat.
The Day Ahead
The FBM KLCI closed with minor gains as bargain hunting activities emerged amid easing worries following the tentative deal formed over US debt ceiling. Investors may see further relief in the market in anticipation of the lifting of US debt ceiling this weekend.
Meanwhile, higher-than-expected US consumer spending which suggested the economy remains resilient has kept the Brent crude oil price on a recovery move, hovering above USD77 per barrel. Meanwhile, the CPO price hovered above RM3,500.
Sector focus: Investors may see further buying interest in the energy sector amid the higher crude oil prices. Besides, investors may see follow-through buying interest in the technology sector in view of Nasdaq’s movement above the key 12,000 level.
