BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
The consolidation continued for a second day with profit taking still dominating trades amid the weaker sentiments that were brought about by a downgrade of the US credit rating.
The weakness was also prevalent among regional equities after the downgrade. Profit taking activities permeated the broader market, resulting in most sector indices ending in the red.
Unsurprisingly, losing stocks were significantly ahead of gaining stocks while trade volumes slipped back below the 3 billion shares range.
With global equities also pulling back overnight, conditions on Bursa Malaysia are likely to remain cautious and this could again leave the FBM KLCI to sustain its consolidation trend, particularly as the psychological 1,450 support level has been breached.
Thus far, the pullbacks have been relatively steep as key index stocks continue to adjust from its overbought conditions but after the two-day consolidation, the selling could let-up and further pullbacks could be milder.
The reduced selling pressure could see the key index find support at the critical 200-day moving average. However, a break of the level may again leave a bearing undertone with the ensuing support pegged at the 1,430 level.
Meanwhile, the hurdles are at 1,455 points and the recent high of 1,460 points respectively.
Malacca Securities Research
The FBM KLCI remained downbeat alongside the weakness across the regional markets, dragged down by the concern of the US credit rating cut by Fitch Ratings and the renewed tension between the US and China.
The lower liners are also not faring any better as traders continue to pare holdings ahead of the upcoming six state elections.
Looking ahead, we reckon further pullback is in store that may mirror the weakness on Wall Street overnight.
Meanwhile, investors may also keep a close watch on several key economic data such as the UK’s Bank of England’s (BOE) interest rate decision as well as the US Non-Manufacturing PMI and Factory Orders to be released later today.
Commodities-wise, Brent crude slipped below US$84/barrel while crude palm oil (CPO) hovered around RM3,900/metric tonne.
The FBM KLCI formed another bearish candle but stay afloat above daily SMA200. Technical indicators, however, stayed positive as the MACD Histogram remained in the positive territory while the RSI has hooked below 70.
The immediate resistances are located along 1,460-1,480 while the support is pegged around 1,400-1,420. – Aug 3, 2023
