REVIEW: Bursa Malaysia kicked off the week on the negative side, with the FBM KLCI losing 0.47 of a point to 1,775.40 as investors used the excuse of sluggish US markets overnight to book gains.
Wall Street’s leading indicator, the Dow Jones Industrial Average, shed 22.81 points to 20,896.61 the previous Friday amid worries about the health of the world’s largest economy following the release of a tepid April retail sales data and over on the New York Mercantile Exchange, the recent rally in crude oil prices ran out of fuel, up only one cent to US$47.84 owing to apparent profit-taking activity.
Surprisingly, despite the widespread Wannacry ransomeware cyber attack, and North Korea’s missile test over the weekend, most stock exchanges in the Asia-Pacific region put up a pretty resillient show, edging higher on bargain hunting, spurred by a bullish lead from the eurozone where London and Frankfurt markets hit record highs.
However, gains were small and the overall market sentiment was somewhat cautious, as uninspiring Chinese economic numbers tempered advances.
Mirroring the guarded underlying tone in the region, the local bourse drifted to an intra-day low of 1,771.87 in the morning before recovering gradually by 2.78 points to settle at the day’s peak of 1,778.65, lifted by selected blue chips.
Elsewhere, second and lower liners were mixed to marginally lower.
Apparently, the two-tier market tone was clearly painted on the score card. In spite of the key index closing firmer, decliners beat winners by 508 to 421 on Monday.
Nevertheless, the Dow rebounded moderately the next day on renewed buying and crude oil prices resumed their upward thrust, spiking a hefty US$1.01 to US$48.85 per barrel after major producers Saudi Arabia and Russia stoked expectations that supply cuts might be extended into 2018,
Tracking the bullish US markets tone, the local bourse jumped 6.38 points to 1,785.03 at the starting bell and quickly rose to a high of 1,787.54, the best level in almost two years.
On the daily chart, the sudden spike in the FBM KLCI triggered a bullish breakout and hence, many people had expected the market to build on the momentum and continue to rally.
However, that was not the story, because a mixed showing in Asia simply was not supportive of the local market, but prompted investors to book gains.
In the wake of profit-taking selling, the key index came under pressure to surrender early gains and retreated back to the previous day’s level in mid-morning and subsequently, flirted there for the rest of the day.
At the final bell, Bursa Malaysia eased 0.5 of a point to 1,778.15 in lacklustre session on Tuesday.
Thereafter, the local bourse tracked a subdued overseas market, depressed further by a pullback in crude oil prices after data from the American Petroleum Institute showed an unexpected build-up in stockpiles.
In another sluggish session, the FBM KLCI slipped to an intra-day low of 1,770.22 in the afternoon before crawling back marginally in the late hours to close down 2.50 points to 1,775.65 in mid-week.
Thereafter, global market sentiment turned sour as mounting political uncertainties over US President Donald Trump’s future sent investors running to look for cover.
In line with frail overseas trend, Bursa Malaysia tumbled to a low of 1,762.04 during intra-day session before trimming losses to end down 8.48 points to 1,767.17 on correction on Thursday.
And yesterday, the FBM KLCI recouped 1.11 points to 1,768.28 after world equities showed signs of stabilising.
Statistics: For the week, the major index skidded 7.59 points or 0.4% to 1,768.28 yesterday, compared with 1,775.87 on May 12.
Turnover for the regular week amounted to 16.969 billion units worth RM15.596bil, against 13.496 billion shares valued at RM10.822bil changing hands during the four-day holiday-curtailed previous week.
Outlook: Bursa Malaysia scaled a new high before tripping into correction mode, spooked by deepening uncertainty surrounding Trump’s presidency.
The pullback in the local bourse has resulted in the FBM KLCI violating the 14-day simple moving average (SMA) and the 21-day SMA during intra-week trading.
Investors should not be too worried about the latest breakdown as we had witnessed the negative crossings of the major index against the two SMA lines several times since this new leg of uptrend was formed in November last year and each time, the energetic bulls bounced back to make a new high.
Going forward, investors can expect Bursa Malaysia to remain resilience and only suffer minor setback should global equities turn ugly.
Otherwise, the local bourse is expected to ride on the robust domestic economy, the strength of the ringgit and commodity prices, and trade higher this week.
Technically, the daily and weekly slow-stochastic momentum indexes are sliding. Combined with the latest sell signal on the daily moving average convergence/divergence histogram, they suggest a correction this week.
An important support is pegged at the 50-day SMA of 1,750 points, of which a clear breakdown will have a negative impact on the market outlook.
Initial upside is to challenge the 1,800-point psychological barrier.
The next upper hurdle is seen at 1,830 points, followed by the 1,850-point barrier.