BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
Malaysian equities started the week on a weak note as the escalating geopolitical events in the Middle East sapped market confidence and resulted in market players trimming their shareholdings.
This saw market breadth decidedly negative with losers thumping gainers on a four-to-one ratio.
At the same time, foreign funds were the main sellers with the day’s volume rising by some 10% from Friday’s total.
The FBM KLCI ended below the 1,550 level while the key lower liner indices shed some 2.0%.
The near-term market environment is still unsettled and the downward bias remains among Bursa Malaysia stocks.
We see market players adopting a more cautious stance and is likely to avoid the equity market for now.
Therefore, the selling is likely to persist in tandem with the weakness among global equity indices overnight that are still mired by the uncertainties over the timing of interest rate cuts as well as the ongoing Middle East concerns.
This also means that the supports are lowered to the 1,540 and 1,535 levels amid the weakening market outlook. On the other hand, the hurdles are at 1,545 points and the 1,550 level respectively.
Malacca Securities Research
Following the rising geopolitical tension in the Middle East, we noticed more selling this week where companies pulled back from their respective 52-week highs.
Similarly, Wall Street ended weaker on the back of (i) rising uncertainty in the Middle East, (ii) elevated Treasury yields (highest since November), and (iii) stronger-than-expected retail sales.
We believe the market could be pricing in lower probability of interest rate cuts going forward; the FOMC (Federal Open Market Committee) meeting in 2024 has less than 50% probability in cutting rates.
On the commodity front, Brent crude price is hovering above US$90/barrel while gold price traded firmer above US$2,350/oz on the back of heightened geopolitical risk. Meanwhile, CPO (crude palm oil) price dipped below RM4,200/metric tonne as rebound in production offset the increase in exports.
The FBM KLCI index ended lower for the third consecutive day. However, the technical
readings on the key index were mixed, with the MACD Histogram extending another positive bar, while the RSI dips below 50. The resistance is envisaged around 1,555-1,560 while the support is set at 1,520-1,525. – April 16, 2024
