The Malaysia stock market has moved lower in two straight sessions, slipping almost 8 points or 0.5 percent along the way.
The Kuala Lumpur Composite Index now sits just above the 1,670-point plateau and it may continue to spin its wheels again on Thursday.
At 9.15am, the FBMKLCI rose +0.31 points to open at 1,670.55.
Malacca Securities (MSSB) in a note today (sept 5) said the FBM KLCI (-0.38%) closed lower, dragged down by selling pressure in the Industrial Products & Services and Banking heavyweights, namely PCHEM (-12.0 sen) and PBBANK (-4.0 sen), as uncertainties arise in the global markets amid concerns about the economic growth and monetary policy direction.
The Day Ahead
Overall, sentiment on the local front ended on a negative note with broad-based sell-offs, following a weak start in the US stock markets.
However, foreign funds remained net buyers on the Bursa exchange.
Meanwhile, Wall Street began September on a weaker footing, with the S&P and Nasdaq experiencing consecutive declines, driven by amplified selling in the technology sector after softer JOLTS openings and ISM Manufacturing PMI data.
Traders will be closely watching the unemployment claims data later tonight and the non-farm payroll report due on Friday.
In the commodity markets, Brent oil extended its decline due to weaker economic growth in China, while on the supply side, OPEC may increase production in Q4.
Gold prices continued trading around the USD 2,500 level, and CPO prices fell below RM 3,900.
Sector Focus: Given the ongoing negative sentiment in the US technology sector, the anticipated further selling pressure on local tech stocks.
Additionally, the strong ringgit could exacerbate the situation.
On the positive side, the strong ringgit may benefit sectors like Consumer, Construction, Building Materials, and Utilities.
Investors may also re-assess fundamentally solid small-cap stocks after last month’s market rout and the current oversold conditions.
Bloomberg FBMKLCI Technical Outlook
The FBM KLCI index ended lower towards the 1,670 level.
However, the technical readings on the key index were positive with the MACD histogram forming another positive bar and the RSI trended above 50.
The resistance is envisaged around 1,685-1,690 and the support is set at 1,655-1,650.
CGS Internatioanal (CGS) said that Asian stock markets went risk-off on Wednesday with both Taiwan TAIEX’s (-4.52%) and Japan’s Nikkei 225 (-4.24%) being the worst hit.
The local benchmark FBMKLCI (KLCI) dropped 6.41pts or 0.38% to end the day at 1,670.24.
Most sectors were in the red, dragged by technology (-2.73%), energy (-2.06%) and utilities (-1.19%).
The outperforming sectors were telecommunications (+0.68%) and plantation (+0.05%).
Trading volume increased to 3.04bn (up from 2.98bn previously) whereas trading value slipped further to RM2.89bn (down from RM2.94bn previously).
Market breadth stayed negative as 307 gainers were thumped by 813 decliners.
The benchmark gapped down yesterday but the bulls managed to claw back some of the losses.
This rebound shows that the bulls still have the upper hand amid the expansion in volatility.
Overhead resistances are unchanged surrounding the 1,680-1,686 levels next.
The 1,700 psychological level may also act as a magnet to draw prices higher in the near-term.
The 1,632-1,638 (MayJuly highs) levels remain as support for now. Their portfolio stays in riskon mode this week.
Maybank Investment Bank (Maybank) said Tte KLCI finished lower for the third consecutive day following the sell-off overnight on Wall Street.
At day’s end, the KLCI declined 6.41pts, or 0.38%, to close at 1,670.24pts.
Decliners were led by PCHEM, PBBANK and MISC.
Market breadth was negative, with losers outnumbering gainers by 813 to 307.
A total of 3.04b shares worth MYR2.89b changed hands.
The KLCI will remain choppy, mirroring the volatility in the global stock markets.
All eyes will also be on the US jobs report as well as Bank Negara’s MPC meeting on Friday.
Technically, they expected the benchmark index to range between 1,660pts and 1,680pts today, with supports at 1,623pts and 1,596pts.
