KLCI to extend consolidation, immediate support at 1,865

TheEdge Wed, Apr 25, 2018 05:24am - 5 years View Original


KUALA LUMPUR (April 25): The FBM KLCI is expected to extend its consolidation phase, taking cue from the overnight rout at most global markets, with immediate support at 1,865.

A gauge of world stocks tumbled on Tuesday, erasing early gains as U.S. bond yields scaled the 3 percent threshold for the first time in four years, while oil prices reversed course after climbing above the $75 per barrel mark, according to Reuters.

Equities in Europe hit session lows before closing near the unchanged mark and U.S. stocks began to retreat after the U.S. 10-year Treasury yield crossed the 3 percent mark to a high of 3.003 percent, its highest since January 2014. In addition, the two-year yield touched 2.5 percent for the first time since September 2008, it said.

The Dow Jones Industrial Average fell 424.56 points, or 1.74 percent, to 24,024.13, the S&P 500 lost 35.73 points, or 1.34 percent, to 2,634.56 and the Nasdaq Composite dropped 121.25 points, or 1.7 percent, to 7,007.35, said Reuters.

AllianceDBS Research in its evening edition yesterday said that dampened by the down close in the preceding day, the FBM KLCI had on April 24 traded lower to settle at the day’s low of 1,865.34 (down 15.02 points or 0.80%) as market participants continued to play on the selling side in anticipation of a lower market.

“In the broader market, losers outnumbered gainers with 574 stocks ending lower and 291 stocks finishing higher. That gave a market breadth of 0.50 indicating the bears were in better control,” it said.

AllianceDBS Research said the market made a lower low on April 24 with the benchmark index falling below the 1,870 level to reach a low of 1,865.34.

“Like the previous market day, the market opened the day on a positive note.

“But, it failed to sustain its position above the 1,880 level as there was no follow through buying interest. This gave rise to a concern of an underlying market weakness.

“As market began to decline, more market participants felt the pressure to liquidate their stock positions. Under the increasing selling supply, an imbalance in the demand and supply equation was created,” it said.

It said the feeling of negative emotional intensity grew when the benchmark index pieced through the 1,870 level on the downside.

The research house said following the down close on April 24, there should be selling attempt again with immediate support at 1,865.

It said a fall below 1,865 could send the market down to the subsequent support zone, 1,850 - 1,857. 

“The analysis of overall market action on April 24 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,865.34 level on April 25,” said AllianceDBS Research.

Based on corporate announcements and news flow yesterday, companies that may be in today may include the following: Unisem (M) Bhd, Globetronics Technology Bhd, Minetech Resources Bhd, Lotte Chemical Titan Holding Bhd, Sarawak Consolidated Industries Bhd, Westports Holdings Bhd, Capitaland Malaysia Mall Trust (CMMT), Tasek Corp Bhd, IHH Healthcare Bhd and Eka Noodles Bhd.

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