REVIEW: In line with investors’ expectation, shares on Bursa Malaysia kicked off the week on an easier note with the FBM KLCI losing 1.99 points to 1,739.73, tracking declines in Wall Street overnight.
The Dow Jones Industrial Average lost 6.85 points to 20,656.10 the previous Friday, dampened by a weaker-than-expected jobs report, geopolitical worries following US’ missile attacks on Syria and a top Federal Reserve official’s comments on trimming the Fed’s balance sheet.
Meanwhile, equities in the Asia-Pacific region traded mixed to marginally lower as investors fled risky assets in favour of safe-heaven bets in the wake of uncertainty, not helping the local bourse.
Consequently, blue chips at home slipped into consolidation mode after the recent rally but the downward pressure was limited as the strength of crude oil prices kept the market sideways.
Unlike the quality issues, certain lower liners continued to enjoy brisk business on speculative plays from retail players.
In range-bound session, the key index flirted between an intra-day high and low of 1,741.68 and 1,736.72 respectively, a pretty tight 4.96 points throughout before ending down 2.20 points to 1,739.52 on Monday.
US stocks were almost flat the next day, up 1.92 points to 20,658.02 after a choppy trade ahead of quarterly corporate earnings but on the Nymex, crude oil prices sutained the upward thrust, jumping a further 84 cents, or 1.6% to 53.08 per barrel due to tension in Syria, underpinned further by news that Libya’s biggest oil field had suffered another outage, while Russian weighed an extension of Opec-led production cuts.
Given the positive setting in the US, many people had expected markets in the region to perform accordingly.
However, most Asian markets struggled as rising geopolitical tensions in the Middle East and the Korean peninsula reminded investors to exercise caution.
Mirroring the regional trend, the FBM KLCI drifted from an intra-day high of 1,740.13 in early business to a low of 1,733.79 in the afternoon before trimming losses in late hour to settle down 3.68 points to 1,735.84 on extended consolidation on Tuesday.
Market sentiment in the US was very much the same come Wednesday, with the Dow closing a shade below the flat line but crude oil prices sustaining the upward momentum.
And although Asian equities remained cautious, as investors ducked for cover on news that China had moved 150,000 troops and medical supplies to its North Korean border fearing a refugee crisis in the event of US airstrike, Bursa Malaysia was clearly outperformed as foreign funds took comfort on the rising crude oil prices to bid up stocks. However, interest was confined in the blue chips and it was clearly reflected on the scoreboard.
Despite the FBM KLCI chalking up 8.24 points to 1,744.08, decliners outnumbered advancers by 506 to 427 in mid-week.
Thereafter, world markets deteriorated, as lingering geopolitical worries over North Korea and Syria continued to weigh on investors’ sentiment.
A fall in crude oil prices also was not helping and a retreat in the quality issues dragged the local bourse down 5.90 points to 1,738.18 on Thursday.
And yesterday, Bursa Malaysia shed an extra 7.19 points to 1,730.99 on extended profit-taking activity due to lack of leads.
Statistics: On a Friday-to-Friday basis, the major index slid 10.73 points, or 0.6% to 1,730.99 yesterday, compared with 1,741.72 on April 7.
Total turnover for the week amounted to 18.924 billion units worth RM11.542bil, versus 20.727 billion shares valued at RM15.293bil transacted the previous week.
Outlook: The benchmark FBM KLCI drifted sideways with a slight downward bias on consolidation since peaking out temporarily at a 22-month high of 1,759.76 points on March 29.
Based on the daily chart, the recent pullback has resulted in the key index breaking down from the short-term ascending trendline, as well as a “death cross” of the 14-day simple moving average (SMA) against the 21-day SMA.
Already tension in the Korean peninsular was high following the US missile attacks on Syria. Combined with the latest news about the US dropping “the mother of all bombs” in Afghanistan, there is simply no compelling leads on the horizon to boost buying but lingering geopolitical risks continuing to sour investors mood further.
And because of that, Bursa Malaysia will probably stay in consolidation for another week but any retracement is likely to be shallow, as the strength of the ringgit and crude oil prices will provide the cushion.
Technically, indicators are either frail or weakening, implying the local bourse will correct on follow-through profit-taking selling this week.
The immediate downside will be to fill the 1,719.27-1,726.12 point gap. If there is still no rebound in sight after filling the hole, look for the lower 1,700-point psychological level as the next support, followed by the 1,680-point level.
To the upside, initial resistance is pegged at the 1,760 points, of which decisive penetration may propel the key index up to the 1,780 points or the 1,800-point barrier.