Bursa Malaysia May Hand Back Thursday’s Gains

Bursa Malaysia bounced higher again on Thursday, one day after ending the two-day winning streak in which it had picked up more than 5 points or 0.3 percent.

The Kuala Lumpur Composite Index now sits just above the 1,610-point plateau although it’s likely to see renewed consolidation on Friday.

At 9.16am, the FBKLCI rose +1.81 points to open at 1,612.42.

RHB Retail Research in a note today (May 17) said the FKLI continued to trend sideways and closed only 1.50 pts higher on Thursday, at 1,608.50 pts.

It opened at 1,608.50 pts and rose to the intraday high of 1,616.50 pts.

However, the bullish momentum failed to follow through, and the index ceded the bulk of intraday gains and closed at the opening level.

The latest session saw the index printing a Doji candlestick.

As mentioned in a previous note, the FKLI should be extending the consolidation until the bullish momentum picks up or a fresh bullish candlestick is formed.

In the event selling pressure increases, the index may retrace towards the 1,590-pt support.

Nevertheless, the 50-day SMA line still moving upwards and supporting the technical set-up.

They will keep their positive trading bias as such, until the index breaches the 1,590-pt threshold.

They advise traders to maintain the long positions initiated at 1,455 pts or the close of 3 Nov 2023.

To manage the trading risks, the trailing-stop is pegged at 1,590 pts.

The immediate support is set at 1,590 pts, followed by 1,575 pts.

Towards the upside, the immediate resistance is still pegged at 1,650 pts, followed by 1,700 pts.

Malacca Securities (MSSB) said the FBMKLCI (+0.49%) ended higher as investors resumed buying interest after the US CPI data came in below expectations, suggesting higher chances for rate cuts going forward.

Meanwhile, the glove counters retraced from their massive rally on Wednesday.

The leading sector on the bourse was Technology at +1.81%.

The Day Ahead
The FBMKLCI and FBM70 managed to register fresh 52-week highs with strong buying interest emerging within the broader market.

Also, the investors in general were buying into the Technology sector following the cooler-than-expected US CPI data.

As the Fed maintained a less hawkish stance in its monetary policies going forward, they believe the overall buying support should continue on Wall Street.

The investors will be watching the industrial production and retail sales data from China to reassess the recovery trend in China.

On the commodity markets, Brent oil noticed support above USD81 and traded along USD83/bbl, while the gold price rallied nearer to USD2400.

Sectors focus: Despite the profit taking activities on the glove companies, they believe the new tariffs on Chinese goods announced by the US could benefit the local companies in view of further trade diversions going forward.

Besides, under this US tariff theme, they like sectors like Semiconductor, EMS, and Metal-related.

Meanwhile, in view of the ongoing domestic catalysts such as the potential revival of mega infrastructure projects like KL-SG HSR, optimism over NETR and NIMP master plans, they opine it should be benefiting the Construction, Building Materials and Property sectors moving forward.

Bloomberg FBMKLCI Technical Outlook
The FBMKLCI index ended higher, surpassing the 1,610 level. The technical readings on the key index were mixed with the MACD Histogram extending a negative bar, while the RSI maintains above 50.

The resistance is envisaged around 1,625-1,630 and the support is set at 1,590-1,595.

CGS International (CGS) said Asian stock markets finished higher on Thursday led by technology stocks in the region on hopes for interest-rate cuts.

The local benchmark FBMKLCI (KLCI) rebounded 7.88pts or 0.49% to end the day at 1,611.11.

Profit-taking were seen in the healthcare (-3.59%) and transportation (-0.23%) sectors.

The broader market was buoyed by technology (+1.81%), consumer products (+0.88%) and construction (+0.80%).

Trading volume dipped to 6.05bn (down from 6.20bn on Wednesday) while trading value fell to RM4.35bn (down from RM4.67bn

Market breadth turned positive as 720 gainers outperformed 492 decliners.

The benchmark closed at its 26-month high (on a close basis) with a white bullish candle yesterday.

The bulls are likely to resume on its journey higher after a week-long base-building phase.

They expect an expansion in volatility in the coming days with the next resistance is seen at 1,620-1,625 levels.

On the downside, KLCI should find its footing near the 1,590-1,601 levels if further weakness sets in.

Following support levels are at 1,582 and 1,565. Their portfolio stays in risk-on mode this week.

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