REVIEW: Stocks in the Asia-Pacific region started out the week on a soft platform and thereafter, drifted lower on bearish mood while Bursa Malaysia, along with Australia and the Philippines, were shut for a public holiday on Monday, as a plunge in technology-related sector on Wall Street overnight sent investors running to the sidelines looking for cover.
Renewed speculation about China slowing down in the second half amid tighter credit further depressed market sentiment while a US Federal Reserve policy meeting later of the week prompted investors to take a cautious approach.
Against the negative overseas backdrop, many people had expected Bursa Malaysia to ease on resumption of business, playing catching up after the long weekend, but the local bourse opened slightly firmer, with the benchmark FTSE Bursa Malaysia KL Composite Index (FBM KLCI) advancing 0.81 point at 1,789.70, as investors took comfort of a steadier crude oil prices to indulge in bargain hunting.
Select blue chips led the way in early trading and soon drive the key index to as high as 1,793.01, underpinned further by a quick recovery in regional markets.
However, the upward thrust could not be stretched any higher, as a pullback in overnight Dow from the apex was not supportive of the bulls.
Eventually, the early positive momentum fizzled out and subsequently slipped into the red in the wake of profit-taking selling. However, losses were small, as optimistic investors were in the market seeking value buys.
In lacklustre trade, the local bourse lost 4.45 points on Tuesday.
Nevertheless, after a short paused, the bulls on Wall Street staged a solid recovery on renewed buying, pushing the Dow, the S&P 500-share Index and the Russell 2000-share Index to an all-time high levels, as the recent beaten-down technology counters bounced back to life while investors positioned for an interest rate hike in the upcoming Fed policy meeting.
In addition, crude oil prices added 38 cents to US$46.46 per barrel after members of the Organisation of the Petroleum Exporting Countries cartel detailed supply cuts around the world to curb oversupply.
As expected, Asian equities took their lead from overnight Wall Street and moved up in the wake of renewed bargain-hunting nibbling and although they turned mixed later, pending an outcome from the US Federal Reserve’s policy meeting, trading on Bursa Malaysia was evidently not affected, as investors’ confidence remained high while foreign funds continued to pour liquidity into the local bourse.
In robust volumes, the FBM KLCI rose from an intra-day low of 1,786.92 in the morning to reach a high of 1.793.07 in late hours before closing at 1,792.35, up 7.91 points in mid-week.
While investors digested the news about the Fed raising interest rates the following day, the local bourse turned sideways and declines in certain quality issues dragged the key index down 2.34 points to 1,790.01 on Thursday.
And yesterday, despite a lower Wall Street overnight, Bursa Malaysia eked out a small plus note, up 1.30 points to 1,791.31, tracking a steadier regional trend.
Statistics: On a Friday-to-Friday basis, the principal index edged up 2.42 points, or 0.1% to 1.791.31 yesterday, compared with 1,788.89 on June 9.
Total turnover for the four-day holiday-curtailed week amounted to 7.986 billion units worth RM10.253bil, against 11.021 billion shares valued at RM12.007bil changed hands during the previous regular week.
Outlook: After a short breather, Bursa Malaysia resumed the scaling amid fresh bargain-hunting buying momentum the past week.
However, the upward pace was somewhat gradual despite the FBM KLCI hitting the highest level since May 2015, an indication that the underlying sentiment of the broader market was pretty cautious.It was not surprising, as market players are holding mixed views because catalysts from abroad simply lack clarity.
While the record breaking Dow and an upbeat assessment of the world’s largest economy by the Fed may turn investors into buying mode and leads the local bourse higher, other issues like the the meltdown of technology-related counters in the US, the US dollar bulls regaining strength against the ringgit, the plunging crude oil prices hammering energy issues and dearer interest rates in the US, really does not bode well for the equity market going forward.
Despite all the uncertainties clouding equities, Bursa Malaysia had proven to be resilient over the past one year and there is a great possibility the local bourse will keep the cautiously bullish bias note in the immediate term until a new catalyst emerges.
Technically, the daily indicators and their week peers are positive, suggesting the FBM KLCI is likely to penetrate the 1,800-point psychological level this week.
If successful, the next upside objective will be to fill the 1,840-1,842 point minor gap. A break above the next upper hurdle of 1,870 points will open the windows for a re-test of the historical peak of 1,896.23, established on July 8, 2014, or the bulls exploring the uncharted territory.
Initial support is anticipated at the 1,778-1,781 point band and a crack of the lower 50-day simple moving average of 1,765 points will have a negative impact on the market.