KLCI seen trending higher, albeit cautiously

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KUALA LUMPUR (March 9): The FBM KLCI is seen trending higher today, albeit cautiously in line with concerns at most global markets that the US Federal Reserve may raise interest rates earlier than expected, as well as lack of fresh leads at the local market.

A robust U.S. jobs report raised concern in markets on Friday that the Federal Reserve may raise interest rates sooner than previously thought, hammering U.S. stock and bond prices, according to Reuters.

News the U.S. unemployment rate hit a 6-1/2-year low in February fed into the dollar's winning streak, propelling it to a fresh 11-1/2-year peak against a group of currencies and a similar high against the euro, it said.

AllianceDBS Research in its evening edition last Friday said that dampened by the weak down close in the preceding day, the FBM KLCI had on March 6 dipped marginally below the 1,800 to 1,799.80 as market participants continued to play on the selling side in anticipation of a lower market.

It said under the persistent selling interest, the benchmark index was trading weak throughout most of the trading sessions before rebounding to settle at 1,806.96 (+0.87, +0.05%).

“In the broader market, gainers outnumbered losers with 454 stocks ending higher and 361 stocks finishing lower. That gave a market breadth of 1.25 indicating the bulls were in control,” it said.

AllianceDBS Research said sellers turned cautious in their game play after the benchmark index dipped below the 1,800 level because the 1,800 level was viewed a psychological support level in the eyes of market participants.

Nonetheless, it said the non-follow through selling pressure at 1,799.80 prompted supportive buying interest which took the benchmark index back up above the 1,800 level.

The research house said following the up close on March 6 Mar 2015, the benchmark index was expected to trade between 1,811 and 1,799 in the coming few days.

It said a downside violation of the 1,800 level could send the market down to the subsequent support at 1,780.

However, the research house said a rise above 1,811 should see the market gearing towards the next overhead resistance at 1,818.

Indicator wise, the MACD is still below the 9-day moving average line, it said.

“The analysis of overall market action on March 6 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,809.65 level on March 9,” said AllianceDBS Research.