What to expect on Bursa Malaysia this Thursday

BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:

Inter-Pacific Research

For the most part, the FBM KLCI was relatively unchanged yesterday, trending within a tight range before succumbing to mild profit taking at the end of the day.

The market was devoid of direction as most market players are still waiting for more leads to emerge.

Most Bursa sector indices also ended lower, save for the healthcare sector as it rallied on prognosis that glovemakers will benefit from the US tariff on China products. Market breadth was neutral but volumes surged to 6.2 billion shares.

We continue to think that the key index will be on a sideway trend for now as it looks to fortify its position above the psychological 1,600 level following its strong year-to-date (YTD) gains.

This has allowed the FBM KLCI’s valuation to reach its historical forward averages even as they are still at the lower end of the valuation range.

At the same time, there remains fewer compelling buying opportunities after the heavyweights’ strong recovery over the past few months.

As such, the FBM KLCI may continue on its sideway consolidation for now as there are also little selling pressure. On the upside, the immediate hurdle is still at the 1,608 level, followed by the 1,614 level. The supports, meanwhile, are at the psychological 1,600 level, followed by the 1,595 level.

Malacca Securities Research

The FBMKLCI and FBM Small Cap traded lower as profit taking were noticed across the board but the FBM70 gained momentum as gloves stocks were in traders’ radar.

We expect the fresh catalyst of US imposing higher tariffs on China by stages throughout 2024-2026 to provide a boost towards Malaysian companies in view of trade diversions going forward.

On Wall Street, the US stock market registered fresh highs on the back of lighter-than-expected CPI (consumer price index) reading which reignited the hopes for earlier rate cuts by the US Federal Reserve.

On the commodity markets, Brent crude had a volatile session, trading within US$81-US$83/barrel. Meanwhile, gold price rallied nearer to US$2,400/oz while CPO (crude palm oil) price rebounded to close at RM3,855/metric tonne.

The FBM KLCI index ended marginally lower, but still hovering above the 1,600 level. The technical readings on the key index were mixed with the MACD Histogram extending a 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 16, 2024

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