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 pulled back on the last trading day of 1H 2023, succumbing to profit taking that sent the key index below the 1,380 level and undid most of the gains attained during the window dressing period.
On Friday, most key index constituents retreated with energy stocks beinng the main losers. At the same time, many of the broader market shares also ended the day lower with market breadth decidedly negative on relatively thin volumes.
It has been a rocky 1H 2023 for the FBM KLCI as it shed nearly 8.0% year-to-date (YTD) to emerge among the worst performing equity index in the region, beset by the combination of weak corporate earnings outlook, depreciating currency and unsettled political environment that left stocks to drift lower.
With the country’s economic and corporate fundamentals little changed, the near-term outlook is likely to remain feeble, particularly with the impending state elections likely to keep market players guarded for longer.
The end of the window dressing activities could also see the key index retreating further as there is still a lack of fresh buying impetus to provide the much-needed lift as well as bucking the mild positivity among global equities over the past few sessions.
With the 1,380 level breached, the supports are lowered to the 1,369-1,374 levels which are the year lows. Further below, the support is at 1,367 points. The immediate resistance is at 1,380 points, followed by 1,385 points.
Malacca Securities Research
The FBM KLCI traded mostly in the red, dragged down by selling pressure in banking heavyweights following the mid-year institutional rebalancing.
We reckon a rebound may take shape, taking cue from bargain hunting activities from the previous session pullback while the calmer market sentiment on Wall Street may also lend strength to the local markets.
Still, we remain cautious over the impending releases of manufacturing data to gauge the strength of the economy.
Commodities-wise, Brent crude advanced to trade above US$75/barrel while crude palm oil (CPO) price advanced towards near RM3,800/metric tonne.
The FBM KLCI formed a bearish candle to drift further below its daily EMA9 level as the key index erased all its monthly gains. Technical indicators turned weaker as the MACD Histogram turned negative while the RSI continues to hover below 50.
Resistance is envisaged along 1,400-1,420 while the support is pegged around 1,370. – July 3, 2023
