The FBMKLCI (-0.61%) closed lower in line with the negative regional markets, as selling pressure was seen in banking stocks, tracking the softer performance from Wall Street.
On the broader market, the Plantation sector (+0.48%) gained, but the Financial Services sector (-1.12%) fell.
At 9.16am, the FBMKLCI climbed +1.65 points to open at 1,456.76.
RHB Market Research in a note today (Dec 22) said the FKLI’s movement underwent a sharp correction towards the 50-day SMA line yesterday, experiencing a 12-pt plunge to settle at 1,456.50 pts and reflecting the prevailing global market sentiment.
The session commenced at 1,468.50 pts and then witnessed a significant movement decline towards the end, reaching a low of 1,455.50 pts before the close.
This pronounced decline suggests substantial selling pressure below the immediate resistance, possibly leading to consolidation near the 50-day SMA line before a potential rebound.
Despite the sharp correction, the overall trend remains positive, as the index is trading above the rising 50-day SMA line.
The RSI momentum indicator has fallen to near the 50% level, indicating a neutral momentum and potential for sideways consolidation in upcoming sessions.
Based on the medium-term outlook, we maintain our bullish trading bias.
The Day Ahead
Malacca Securities (MSSB) said the FBM KLCI extended the pullback for the second session with further profit taking activities from the banking heavyweights.
Meanwhile, Wall Street ended positively after a sharp one-day pullback despite the US GDP being revised lower at 4.9% for 3Q23, while jobless claims came in at 205k vs. estimates of 214k.
Market will be watching the Federal Reserve’s preferred PCE Inflation report that will be released later tonight; as of this juncture, the dollar index headed lower with the anticipation of the dovish stance from the Fed next year.
Following the positive rebound on Wall Street, buying interest may return to the local exchange.
On the commodity markets, Brent oil prices steadied around the USD80/bbl as record US production and rising inventories offsetting the tensions in the Middle East, limiting the upside at this juncture.
Sector focus: Traders could relook into the Technology sector after the strong rebound on Wall Street, as we noticed overall earnings have been stabilising at least for the past 2 quarters.
Meanwhile, we favour the infrastructure theme next year coupled with the Johor-region focus theme.
Thus, we believe it should benefit the Construction, Property, Building Material and Utilities sectors.
Bloomberg FBMKLCI Technical Outlook
The FBMKLCI ended sharply lower after briefly surpassing the 1,465 zone.
The technical readings on the key index were mixed, with the MACD Histogram forming a rounding top formation, while the RSI maintains above the 50 level.
The resistance is envisaged around 1,470-1,480 and the support is set at 1,440-1,450.
