Bursa Malaysia May See Additional Support

Bursa Malaysia on Wednesday ended the seven-day losing streak in which it had slumped more than 25 points or 1.5 percent.

The Kuala Lumpur Composite Index now sits just above the 1,590-point plateau and it may add to its winnings on Thursday. 

RHB Retail Research (RHB) in a note today (June 27) said the FKLI  staged a strong rebound on Wednesday, rising 10.50 pts to close at 1,595.50 pts.

The index initially started off on a weaker note, opening lower at 1,584.50 pts.

After touching the 1,579.50 pts day’s low, it rose to the 1,597.50 pts day’s high before the close – printing a long bullish candlestick.

The latest price action suggests the market sentiment has turned positive.

In the event the index climbs above the 50-day SMA line, it will test the 1,600-pt psychological resistance level.

Breaching this threshold should rally the index higher.

Meanwhile, expect strong selling pressure to emerge at the 1,600-pt level.

Despite the index having a bullish session, the technical setup remains bearish now.

They still keep the negative trading bias unless the 1,622 pts resistance is breached.

They advised traders to retain the short positions initiated at the close of 19 Jun or 1,597 pts.

To minimise the trading risks, the initial stop-loss threshold is set at 1,622 pts.

The nearest support stays at 1,575 pts, followed by the 1,550-pt mark.

On the upside, the immediate resistance is eyed at 1,600 pts and followed by 1,622 pts, ie the close of 4 June.

Malacca Securities (MSSB) said the FBM KLCI (+0.35%) ended higher as the index was lifted by buying pressure in the utilities heavyweights, namely YTLPOWR and YTL, as the rebound in Nvidia has boosted the confidence in our local Technology sector.

Meanwhile, theTransportation & Logistic sector (+1.89%) was the best performing sector.

The Day Ahead
The FBM KLCI closed higher with the help of YTL-related heavyweights, snapping a 7-day losing streak, and saw a rebound in FBM70 and FBM Small Cap.

Meanwhile, the US stock markets rose for the second day after the Federal Reserve commented that the biggest banks operating in the US will be able to withstand a severe recession scenario while maintaining their ability to lend to consumers and corporations.

This week, traders will still be monitoring the PCE data to understand more clues on the interest rate directions going forward.

On the commodity markets, Brent oil rebounded off the support zone and traded above USD84/bbl, while gold price fell significantly below USD2330.

For CPO, it continues to trade within the range bound mode below RM3900.

Sectors focus: As the US technology giants rebounded for the second session, they expect the bargain hunting activities to extend on their Technology stocks, led by the rising demand from the data center, AI, and cloud services catalysts.

Going forward, they liked defensive characteristic consumer stocks as well as the shipping industry, which is likely to expect incremental growth as the shipping supply chain could be under strain again with longer waits for containers and shipping.

Bloomberg FBMKLCI Technical Outlook
The FBM KLCI index rebounded, close to breaching the 1590 level.

The technical readings on the key index were mixed with the MACD Histogram forming a positive bar, while the RSI oversold.

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

CGS International (CGS) said Asian stock markets finished higher on Wednesday with Japan’s Nikkei 225 (+1.26%) leading the gains.

The local benchmark FBMKLCI (KLCI), snapped its seven days losing streak and recovered 5.57pts or 0.35% to end the day at 1,590.95.

The broader market was lifted by transportation (+1.89%), utilities (+1.51%) and construction (+1.11%).

Laggards were seen in plantation (-0.29%), REIT (-0.15%) and telecommunications (-0.11%).

Trading volume decreased to 4.73bn (down from 5.23bn on Tuesday) while trading value dropped further to RM3.22bn (down from RM3.70bn previously).

Market breadth turned positive as 674 gainers beat 433 losers.

The benchmark formed its long-lost white candle yesterday after eleven consecutive black candles.

However, it remains too early to confirm a reversal yet.

The odds are in favour of the bears for the immediate term as the KLCI is still trading below the trend line drawn from the 1,446 low.

Falling below 1,582 may see the benchmark fall to test the 1,565-1,575 support next.

There is still light at the end of the tunnel, however.

The benchmark needs to close firmly above yesterday’s high of 1,593 to signal that a short-term rebound up to test the psychological 1,600 resistance is likely taking place.

The following resistance is the downtrend line (1,610) from 1,632.

Their portfolio has reverted to risk-off mode this week.

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