The Malaysia stock market on Tuesday snapped the two-day winning streak in which it had picked up just 2 points or 0.1 percent. The Kuala Lumpur Composite Index now rests just beneath the 1,400-point plateau and it’s likely to spin its wheels again on Wednesday.
At 9.20am, the FBM KLCI opened at 1396.56.
RHB Retail Research said today (May 31) the FKLI experienced a sharp decline below the 1,400 pts support level yesterday – settling 11 pts lower to signal further downward pressure. The FKLI opened at 1,403.50 pts, and after briefly hitting a high of 1,406 pts, fell until the end of the session to close at the day’s low of 1,392.50 pts. The fresh “lower low” bearish pattern below the 1,400 pts mark likely indicates that the index would fall further towards the 1,382 pts immediate support in the upcoming sessions. The FKLI may then consolidate near the immediate support level before continuing to fall lower in the medium term. Riding on the bearish momentum, they maintain their negative 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 is lowered to 1,382 pts, or the low of 16 Mar, followed by 1,360.50 pts, ie 15 Oct 2022’s low. Meanwhile, the immediate resistance level is revised to 1,410.50 pts or 29 May’s high, followed by 1,425 pts.
Malacca Securities said The FBM KLCI (-0.6%) erased all its previous two session of gains to close below the 1,400 psychological level, as selling pressure from foreign funds escalated. The lower liners closed mixed, while the healthcare sector (-1.3%) underperformed the mixed sectorial peers.
Global markets: Wall Street ended mixed as the Dow (-0.2%) retreated after the consumer confidence data in May 2023 slipped to 6-month low as the labour market softens, while the S&P 500 closed flat. The European stockmarkets closed lower, while Asia stockmarkets ended mixed.
The Day Ahead
The FBM KLCI drifted below the key 1,400 level as investors took profit ahead of the passing of US debt ceiling deal. Whilst global sentiment remained mixed, they believe bargain hunting activities may emerge on the local front in undervalued stocks. Meanwhile, the renewable energy theme may come into investors’ focus as the government target to roll out its Energy Transition Roadmap, as well as to
reveal the renewable energy export guidelines in June.
Commodities wise, the Brent crude oil tumbled towards USD73 amid uncertainty over global demand prospects, while the CPO price hovered above RM3,350.
Sector focus: Investors may favour the technology sector given the Nasdaq crossed above the 13,000 level. The renewable energy counters may shine following a series of government’s initiative. However, selling pressure may be noticed in the energy sector after the plunge of crude oil prices.
