BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
The FBM KLCI maintained its downward streak, extending its consolidation for a fifth straight day as market conditions stayed cautious, undermined by uncertainties over the direction of global interest rates amid stubbornly high inflation rates.
As a result, the key index mirrored the performance of most global equity indices to head lower.
The broader market shares, however, attempted a rebound with market breadth nearly equal. Traded volumes climbed back above 5 billion shares for the day.
Despite the sustained weakness, the key index constituents were looking to rebound yesterday in an attempt to break the downward streak.
The profit taking spell may also have run its course as technical indicators are approaching oversold that could prompt a rebound.
As such, the key index could also be attempting to find support near the 1,600 levels as it also looks to build up a base around that level following the recent pullback.
This could allow the FBM KLCI to recover some of its losses this week but any upside appears meek at this juncture due to few positive leads. The results reporting season is also ending and there are also few overseas leads to excite market players.
Therefore, the key index is likely to drift further with the supports pegged at 1,600 and 1,595 levels. The hurdles, meanwhile, are at 1,610 and 1,615 levels respectively.
Malacca Securities Research
After building multiple fresh 52-week highs prior to the earnings season, the FBM KLCI has headed for a pullback over the past few trading days as profit taking activities emerged.
Despite a slight increase in the US gross domestic product (GDP), Wall Street ended on a weaker tone after digesting mixed corporate earnings from Dell, Zscaler, MongoDB and Gap.
Also, the traders will be watching closely the PCE index that will be released tonight (May 31) for this will be crucial for the US Federal Reserve to determine the interest rate direction going forward.
On the commodity markets, Brent crude still traded within the consolidation phase but had a downward biased trading tone as it rejected the US$84/barrel level twice this month. The CPO price has pulled back below the RM4,000/metric tonne level but we believe the overall trend is turning higher in the near term on the back of recovering demand from China.
The FBM KLCI index ended lower for the fifth session, dipping below the 1,605 level. The technical readings on the key index were mixed with the MACD Histogram extending another negative bar while the RSI maintains above 50.
The resistance is envisaged around 1,620-1,625 while the support is set at 1,585-1,590. – May 31, 2024
