Bursa Malaysia has ticked lower in back-to-back sessions, slumping more than 15 points or 1.1 percent along the way. The Kuala Lumpur Composite Index now rests just beneath the 1,390-point plateau and it’s tipped to open in the red again on Thursday.
At 9.17am, the FBM KLCI opened at 1382.26.
RHB Retail Research, said today (June 1) that the FKLI continued its bearish momentum yesterday as it declined 9.5 pts to settle at 1,383 pts – near the 1,382 pts immediate support.
The FKLI opened at 1,392 pts and attempted to move higher, reaching a day’s high of 1,399.5 pts in the early session. However, strong selling pressure then emerged to reverse the momentum for the remainder of the session.
The index reached a day’s low of 1,381 pts near the close. The bearish momentum below 1,400 pts aligns with our previous expectations.
RHB anticipates that the FKLI will consolidate near the immediate support level in the upcoming sessions.
Considering the weak RSI at 27% and the absence of any divergence signals, RHB believes the negative momentum may persist in the medium term, with the FKLI potentially falling below the 1,382-pt immediate support level. Hence, RHB maintains their bearish trading bias.
Malacca Securities, meanwhile, said the FBM KLCI (-0.7%) extended its decline as concern persists over the US debt ceiling, coupled with the uncertainties ahead of the 6 states elections. The lower liners also trended lower, while the plantation sector (-2.2%) underperformed on the weaker CPO prices.
Global markets: Wall Street faltered as the Dow fell 0.4% on the persistent concern over the US debt ceiling situation, whilst profit taking activities emerged on technology shares. The European stockmarkets extended their decline, while Asia stockmarkets closed mostly in red.
The Day Ahead
The FBM KLCI slumped for the second session along with regional markets as investors took profit after the contraction in China’s factory activity dampened hopes for global economic recovery. Investors may continue to watch the debate for US debt ceiling while taking a cautious trading approach. At the same time, the labour market tightness and stubbornly high recent inflation data may continue to sap trading interest in the equities market. Commodities wise, the Brent crude oil tumbled towards USD72, while the CPO price hovered above RM3,200.
Sector focus: Investors may see further selling pressure in the energy sector amid declining crude oil price. Besides, the technology sector may take cue from the profit taking activities following the decline on Wall Street overnight. Meanwhile, sectors such as telecommunications, utilities and REIT may be under the limelight, being defensive in nature amid the on-going volatile market condition.
Maybank Investment Bank (Maybank IB) added that the FBMKLCI Index extended its decline for a second consecutive day, in-line with weak sentiment in regional markets.
At day’s end, the benchmark index fell 9.79pts, or 0.70%, to 1,387.12pts, led by declines in KLK, PETDAG and HLFG.
Market breadth remained negative with losers continuing to outnumber gainers by 521 to 360. A total of 3.54b shares valued at MYR5.25b changed hands.
Market volatility will remain elevated in the near term even though US Congress is one-step closer to approving a debt limit deal and avoiding a potential US default.
Technically, Maybank IB expects the FBMKLCI Index to range between 1,380pts and 1,410pts today, with supports remaining at 1,380pts and 1,350pts.
