The Malaysia stock market had moved lower in four straight sessions, slumping almost 25 points or 1.5 percent along the way. The Kuala Lumpur Composite Index now rests just above the 1,380-point plateau although it’s tipped to open in the green Tuesday as it catches up on missed sentiment.
At 9.16am, the FBM KLCI opened at 1382.40.
RHB Retail Research, in a note today (June 6), the FKLI continued to experience selling pressure last Friday, retreating 3.5 pts and closing weaker at 1,381.50-pts, thereby negating the Bullish Engulfing formed on 17 Mar.
Last Friday, the index began the session at 1,383 pts and initially rose to touch the day’s high at 1,387 pts. However, it fell to the day’s low at 1,375 pts before paring the intraday losses to close at 1,381.50 pts.
RHB observed that the index has formed a fresh “lower high” and “lower low”, extending the bearish structure.
Meanwhile, the latest “long lower shadow” indicates strong buying pressure has emerged at 1,375 pts. As long as the index stays above 1,375 pts, the index may stage a short-term technical rebound to test the 1,400-pt resistance.
On the flipside, breaching below 1,375 pts would open doors for a further correction. At this stage, since the bearish setup remains intact, RHB keeps the bearish trading bias unchanged.
Maybank Investment Bank said the FBMKLCI Index ended the week on a softer note despite paring down the earlier losses last Friday.
At day’s end, the benchmark index fell 1.75pts, or 0.13%, to 1,381.26pts, led by declines in QL, NESTLE, HKBANK and MAXIS.
Market breadth however turned positive with gainers outnumbering losers by 568 to 336. A total of 3.60b shares valued at MYR1.94b changed hands.
Easing selling pressure saw improving buying interest across the board as bargain hunting began.
Stronger performance in the US equities market last week is set to boost domestic sentiment as Malaysia’s market re-opens after an extended weekend.
Technically, Maybank IB expects the FBMKLCI Index to range between 1,370pts and 1,410pts today, with supports remaining at 1,380pts and 1,350pts.
Malacca Securities, on the market today, added the FBM KLCI (-0.1%) bucked the mostly positive regional peers to edge lower for the 4th straight session, dragged down by weakness in consumer and banking heavyweights. The lower liners also advanced, while the technology sector (+1.2%) outperformed the mostly positive sectorial peers.
Global markets: Wall Street pullback from the previous session rally as the Dow fell -0.6%, dragged down by profit taking activities in mega cap technology heavyweights.
The European stock markets also retreated, but Asia stock markets closed mostly upbeat.
The Day Ahead
The FBM KLCI remained bearish as investors selling pressure in banking and selected consumer heavyweights, while investors piled into small and mid-cap stocks. We deem the pullback on Wall Street overnight as a healthy consolidation, while the local bourse may track regional markets’ uptrend move and bargain hunting activities may emerge.
Investors may monitor Japan’s and Eurozone’s GDP, as well as China’s inflation rate to gauge the aggressiveness of global interest rate hikes. Commodities wise, the Brent crude oil traded above US76 per barrel, while the CPO traded above RM3,350.
Sector focus: The financial sector may see a rebound following last week’s selldown. Besides, renewable energy could continue to be the trend in line with government’s initiative to expand renewable energy use in Malaysia. Besides, the property related counters may shine amid optimism over economic recovery.
