Malaysia Shares Overdue For Support On Tuesday

The Malaysia stock market has finished lower in six straight sessions, slumping more than 20 points or 1.2 percent along the way.

The Kuala Lumpur Composite Index now sits just beneath the 1,590-point plateau and it’s poised to stop the bleeding on Tuesday.

At 9.17am, the FBMKLCI rose +0.50 points to open at 1,589.71.

RHB Retail Research (RHB) in a note today (June 25) said the FKLI  failed to undergo a rebound and slipped by 1 pt yesterday to close at 1,591 pts.

The benchmark index began trading at 1,591 pts.

After a volatile session where it oscillated between 1,597 pts and 1,583.50 pts, it settled at 1,591 pts.

The latest price action saw the index closing below the 50-day SMA line.

The weak price action indicates that the bears still possess the upper hand.

The correction may be extended until the index finds a support at the 1,575-pt level.

The RSI continues to trend downwards below the 50% mark, showing that bearish momentum is gaining pace.

Should the index attempt a rebound, it may face strong resistance at the 1,600-pt level.

Premised on the bearish momentum, they make no change to their negative trading bias.

They recommended that traders hold on to the short positions initiated at the close of 19 Jun or 1,597 pts.

To manage the trading risks, the initial stop-loss is fixed at 1,622 pts.

The immediate support is marked at 1,575 pts, followed by 1,550 pts.

Towards the upside, the nearest resistance is at 1,600 pts and followed by 1,622 pts, which was the 4 Jun close.

Malacca Securities (MSSB) said the FBM KLCI (-0.04%) ended lower as the index was dragged by selling pressure in YTL-related.

Also, the sentiment was affected by the profit taking in Nvidia.

On the broader market, the construction sector (+0.39%) was the best performing sector, while the health care sector (-2.36%) declined the most.

The Day Ahead

Profit taking activities were seen across the Bursa exchange but they noticed FBM KLCI is hovering around key support.

Meanwhile, the US stock markets ended on a mixed note awaiting several key corporate earnings like Micron, Nike and Fedex, while traders will be on the lookout for the US GDP (Thur) and PCE (Fri) data this week.

Both the data may provide clues for the Federal Reserve to decide on interest rate direction.

Currently, market participants are still expecting about 2 rate cuts this year.

On the commodity markets, Brent oil has rebounded above USD85/bbl, while gold price is ranging along USD2330.

The CPO price closed below RM3,900 but still hovering above the key support of RM3850.

Sector focus: Although they anticipated bargain hunting activities to emerge, overall market conditions are still affected by the profit taking on the Technology stocks in the US, namely Nvidia.

Nevertheless, they opined that the sentiment will improve on the local front with the help from the rising demand of the data center, AI and cloud services catalysts, which may eventually translate to positive trading activities within the EMS players.

Besides, they liked Solar, Construction and Building Materials sectors in view of the rising construction activities in the data centre front, while the Shipping industry may benefit from the Red Sea incident earlier.

Bloomberg FBMKLCI Technical Outlook
The FBM KLCI index ended lower dipping below the 1,590 level.

The technical readings on the key index were negative with the MACD Histogram forming another negative bar, while the RSI dropped below 50.

The resistance is envisaged around 1,605-1,610 and the support is set at 1,570-1,575.

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