Maybank Research cautions investors on more correction ahead

KUALA LUMPUR: Maybank Investment Bank Research has cautioned investors to brace for more downside volatility on Tuesday after the overnight tumble on Wall Street, though it sees the selldown to temporary.

“Expect another bloodbath today following the steep correction in Wall Street overnight. Weaker oil price could also weigh on the stock market. 

“Technically, we expect FBMKLCI to trade between 1,830 and 1,860 today. Downside supports are 1,840 and 1,812,” it said in its technical outlook for the market.

Meanwhile, Reuters reported Australian shares dropped 2.7% in early trade to their lowest level since October.

Japan's Nikkei share average dived on Tuesday morning to a level not seen since late October after Wall Street plunged overnight on concerns about rising bond yields and potentially rising inflation. The Nikkei fell to as low as 21,698.52, and was down 4% in early morning. The broader Topix fell 4.3% to 1,745.79

On Monday’s performance, Maybank Research said the KLCI gapped down at the opening bell. Although losses narrowed in the afternoon session, it believes the selldown is not over yet, at least in the near-term. 

“The tone is now bearish bias, reflected by the negative readings in both Stochastic and MACD indicators. 

“Therefore, support at the 23.6% Fibonacci Retracement level is weak. We expect FBMKLCI to correct further, possibly towards the next supports at 1,840 and 1,812 over the next few days. 

“Notwithstanding that, we reckon that the current selldown is likely to be temporary as the longer-term trend remains positive,” said Maybank Research.