KLCI to trend higher on strong Wall Street close, Malakoff listing euphoria



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KUALA LUMPUR (May 15): The FBM KLCI is expected to trend higher and close the week on a positive note, riding on the back of the strong overnight close at Wall Street as well as the likely euphoria at the local market with the mega initial public offering of Malakoff Corporation Bhd on Bursa Malaysia today.

Increasing expectations the U.S. Federal Reserve will hold off raising interest rates until September at the earliest helped push the S&P 500 to a record high close on Thursday and drove the dollar to near its lowest level since January, according to Reuters.

Gold hit a three-month high as the dollar came under pressure, it said.

U.S. data showed recent dollar strength and lower oil prices suppressed producer price inflation in April, supporting the view the Fed will probably not raise rates until later this year, said Reuters.

AllianceDBS Research in its eveing edition Thursday said that led by the up close in the preceding day, the FBM KLCI had on May 14 traded higher to 1,807.90 as market participants continued to play on the buying side in anticipation of a higher market.

The research house said that in the absence of stronger selling interest, the benchmark index was in the green throughout most of the trading sessions before settling near the day’s high at 1,807.55 (+4.53, +0.25%).

“In the broader market, gainers outnumbered losers with 411 stocks ending higher and 355 stocks finishing lower. That gave a market breadth of 1.15 indicating the bulls were in control,” it said.

AllianceDBS Research said the market saw follow through buying interest on May 14, this can be seen from the higher high and higher low.

However, the research house said market participants were still seen unwilling to play an aggressive buying game for fear of sudden market reversal.

“Given what happened on May 13 & 14, buyers and sellers are expected to exchange their stock positions in the coming few days with immediate hurdle and support pegged at 1,814 and 1,795 respectively.

“A rise above 1,814 should see a test of next resistance at 1,823. Conversely, a fall below 1,795 could send the market down to the subsequent support at 1,770,” it said.

The research house said that indicator wise, the MACD was below the 9-day moving average line.

“The analysis of overall market action on May 14 revealed that buying power was stronger than selling pressure.

“As such, the FBM KLCI would likely trade above the 1,807.90 level on May 15,” said AllianceDBS Research.