Bursa Malaysia headed south again on Wednesday, one day after snapping the five-day losing streak in which it had dropped more than 25 points or 1.6 percent.
The Kuala Lumpur Composite Index now sits just beneath the 1,640-point plateau although it figures to rebound on Thursday.
At 9.15am, the FBMKLCI rose +4.24 points to open at 1,644.04.
Malacca Securities (MSSB) said in a note today (Sept 12) that the FBM KLCI (-1.24%) closed lower as profit-taking emerged within banking heavyweights, namely CIMB (-22.0 sen) and PBBANK (-11.0 sen).
Additionally, a hawkish tone from the BoJ dampened sentiment across the Asian stock markets.
The Day Ahead
Selling pressure was observed across the broader market, driven by the Petronas and Petros developments and weak Brent oil prices, causing small-cap stocks to dip further.
In the U.S., Wall Street managed to trade off its lows despite a slight uptick in core CPI data, which came in at 0.3% compared to the 0.2% consensus.
Although the CPI was largely in line with expectations, investors are now shifting their focus to the upcoming PPI data and the Federal Reserve’s FOMC meeting next week.
In the commodities market, Brent oil recovered above USD70 after inventories rose by 0.8 million barrels, slightly below the consensus of 0.9 million.
Gold prices remained steady above USD2,500 as traders look ahead to the FOMC meeting.
Meanwhile, crude palm oil continues to trade below RM3,900.
Sector Focus: With the strong rebound in the US and a modest recovery in Brent oil prices, MSSB expected bargain hunting to emerge on the local market.
However, the upside for local technology stocks may be limited due to the stronger ringgit.
On the other hand, they favoured domestic-driven sectors such as Consumer, Construction, Financials, Building Materials, and Utilities, which are likely to benefit from the stable ringgit environment.
Bloomberg FBMKLCI Technical Outlook
The FBM KLCI index closed lower towards the 1,639 level.
Additionally, the technical readings on the key index were negative, with the MACD histogram forming another negative bar and the RSI dipping below 50.
The resistance is envisaged around 1,654-1,659 and the support is set at 1,619-1,624.
CGS International (CGS) said that most Asian stock markets closed in the red on Wednesday, tracking continued weakness in Japan on the back of a stronger Yen.
The local benchmark FBMKLCI (KLCI) tumbled 20.55pts or 1.24% to end the day at 1,639.80.
Sector-wise, it was a sea of red across the board except for telecommunications (+0.03%).
The largest laggard was energy (-2.84%) after crude oil tumbled to its lowest in 17 months.
Other notable decliners were technology (-2.14%), healthcare (-1.69%) and financial services (-1.68%).
Trading volume dipped to 2.96bn (down from 3.05bn previously) while trading value decreased to RM3.34bn (down from RM3.79bn previously).
Market breadth stayed negative for the seventh day in a row as 283 gainers were crushed by 825 decliners.
The benchmark gapped down yesterday to close at its lowest in 2-weeks and continued to trade above the 20-day EMA, with a small structure of lower lows and lower highs signals that the immediate trend is still down.
Further weakness to test the 50-day EMA (1,631) may be next.
Closing below the 1,632-1,638 (May-July highs) levels would turn us bearish for the overall market in the short-term.
The upside resistance is seen at 1,559-1,663 followed by the tough 1,680-1,686 levels.
Their portfolio stays in risk-on mode this week.
However, it would revert to its risk-off mode next week if the KLCI closes below 1,636 on Friday.
Maybank Investment Bank (Maybank) said the KLCI took a dive yesterday as profit-taking intensified, in tandem with the negative performance across regional markets.
All sectors took a beating with the exception of Telecommunications. At day’s end, the KLCI plunged 20.55pts, or 1.24%, to close at 1,639.80pts.
Market breadth was negative, with losers outnumbering gainers by 825 to 283.
A total of 2.96b shares worth MYR3.33b changed hands.
The KLCI may stage a rebound today after Wall Street erased an intraday loss, but sentiment will remain cautious amid expectation that the Fed may move gradually with rate cuts instead of a 50bps cut in September.
The US PPI data on Thursday is another key event to monitor.
Technically, they expected the KLCI to range between 1,630pts and 1,650pts today, with supports at 1,623pts and 1,596pts.
