Thursday 28 Mar 2024
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KUALA LUMPUR (Jan 8): The FBM KLCI could snap its losing streak today on the back of the higher overnight close at US and Europe markets.

The FBM KLCI has lost some 52.07 points or 2.96% year-to-date in 2015, with investor sentiment still nervy on declining crude oil prices and a weaker ringgit.

But going by the improved sentiment at the global markets, the FBM KLCI may be able to snap its six-day losing streak with range-bound trading.

U.S. and European stock prices rose on Wednesday on hopes the European Central Bank would embark on more stimulus soon to avert deflation in the euro zone, while oil prices showed no sign of rebounding from their lowest levels since 2009, according to Reuters.

Crude oil prices have fallen 50 percent since mid-2014, tipping monthly euro zone inflation into negative territory for the first time since 2009. The European statistics office estimated that prices were down 0.2 percent in December from a year earlier, it said.

As a result, investors are growing more hopeful that the ECB might roll out a bond-buying program to prevent a downward price spiral. Those expectations have helped knock the euro to a nine-year low and bond yields in several euro zone members to record lows, said Reuters.

AllianceDBS Research in its evening edition Wednesday said the FBM KLCI had on Jan 7 traded marginally lower to 1,706.18 as market participants continued to play on the selling side in anticipation of a lower market.

It said that in the absence of stronger buying interest, the benchmark index kept its position in the red throughout trading sessions before settling near the day’s low at 1,709.18 (- 7.40, - 0.43%).

“In the broader market, gainers outnumbered losers with 413 stocks ending higher and 352 stocks finishing lower. That gave a market breadth of 1.17 indicating the bulls were in control,” it said.

AllianceDBS Research said the lower low on Jan 7 indicated that sellers were in better control over the buyers.

However, it said supportive buying interest was seen in the area of 1,706.

“Given the significance of the 1,700 psychological level, it was not surprise to see the presence of supportive buying interest in an attempt to keep the benchmark index from drawing nearer to the 1,700 level,” it said.

The research house said a downside violation of 1,700 could create a snow ball rolling effect, which would pressure the market down to the recent low of 1,671 (17 Dec 2014).

“The overhead resistance is pegged at 1,730. Indicator wise, the MACD is still marginally above the 9-day moving average line.

“The analysis of overall market action on Jan 7 revealed that buying power was weaker than selling pressure.

“As such, the FBM KLCI would likely trade below the 1,706.18 level on Jan 8,” said AllianceDBS Research.

 

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