SHARE prices on Bursa Malaysia are likely to be lower this week with investors expected to remain on the sidelines and trade sideways following the failure of European leaders to show some consistency in tackling the European debt woes.
Affin Investment Bank head of retail research Dr Nazri Khan said the rising funding tension in the eurozone had overshadowed a number of positive earnings reports in the United States and Europe.
The investment bank reckoned that investors were disappointed with the slow response especially from the European Central Bank (ECB) and the new leadership in Italy and Greece in containing the crisis.
“We believe the global equity market will be affected by the widening European debt crisis following disappointing French and Spanish bond auctions and downgrade warnings from ratings agency on the US large banks,” he told Bernama on Friday.
He said while Italian bond yields remained above 7%, a disappointing French and Spanish 10-year bond auction were seen as signs that the debt contagion threat was spreading to other eurozone countries.
He said the fact that Fitch had issued a warning that deteriorating conditions in Greece, France, Spain and Italy would affect the largest US banks suggested that the ECB's bond buying activities had been slow and too late.
He said the FTSE Bursa Malaysia KLCI (FBM KLCI) was now ripe for a pullback towards a lower range of 1,450-1,430 support level.
“On the technical front, we see the FBM KLCI continuing to break down from a symmetrical triangle pattern and looked poised for a test of support at 1,450 and 1,430 in the near term,” he added.
During the week just ended, the local bourse saw range-bound trading before the benchmark index ended Friday's trade 11.07 points lower at 1,454.40.
On a week-to-week basis, the FBM KLCI declined 14.35 points to 1,454.40 compared to the previous Friday's close of 1,468.75.
The Finance Index lost 163.97 points to 12,988.79 while the Plantation Index jumped 95.49 points to 7,614.64 and the Industrial Index slipped 11.71 points to 2,673.18.
The FBM Emas Index dropped 53.78 points to 9,985.55 but the FBM70 Index advanced 74.70 points to 10,928.32 while the FBM Ace Index fell 72.69 points to 4,195.92. The FBMT100 also declined 61.21 points to 9,785.31.
Total weekly volume rose to 10.924 billion shares worth RM7.286bil from 9.203 billion units valued at RM6.049bil the previous week. Bernama