BELOW are excerpts of viewpoints from two selected research houses on what investors can expect in the day ahead:
Inter-Pacific Research
The Malaysian stocks tumbled yesterday as the rout in global equities extended to Bursa Malaysia stocks.
Market conditions were overwhelmingly negative with sentiments severely affected by the recession fears in the US as stocks that were the big gainers on Bursa Malaysia recently took the biggest beating.
The intense selling was also prevalent among the broader market shares with losers overwhelming gainers by more than a 10-to-1 ratio. Traded volumes surged to 9.3 billion shares for the day.
Near-term market conditions are likely to stay dour, affected by the on-going market uncertainties as the intense selling of global equities persisted overnight, leaving investor sentiments still unsettled and market volatility to prevail for longer.
Yesterday’s steep sell-down has also left the FBM KLCI in a precarious condition and at the crossroads as it ended the day near its 200-day moving average line.
A breach of the 200-day support at 1,533 points would undo the key index’s uptrend and a bearish streak could take over.
Nevertheless, we think that bouts of bargain hunting may emerge after yesterday’s steep falls with the key index attempting to hold on to the 1,533 support to ensure that the 200-day moving average is preserved despite the steep overnight losses among key global indices.
If the 1,533 level is breached, however, the next supports are at 1,530 and 1,520 points respectively. The resistances, meanwhile, are at 1,540 and 1,550 points respectively.
Malacca Securities Research
With the yen reverse carry trade theme, Asian stock markets have taken a significant beating, causing Malaysia’s market to crater 4.6%-9.42% across both large-cap and smaller indices; the biggest declining sectors include properties and technology.
Meanwhile, Wall Street gapped down but narrowed the intraday losses after the US services PMI data came in better-than-expected which alleviated earlier recession fears.
We believe the market could have fallen to a more acceptable level with an accumulation phase emerging in the near term.
Currently, global futures are rebounding around 1%. In the commodity markets, Brent crude declined towards US$75/barrel while forming a hammer candle while gold trended sideways along US$2,400/oz, Elsewhere, the FCPO (crude palm oil futures) price tanked below RM3,800/metric tonne.
The FBM KLCI index ended significantly lower towards 1,536 level. The technical readings on the key index were negative with the MACD histogram forming another negative histogram bar and the RSI is oversold.
The resistance is envisaged around 1,551-1,556 while the support is set at 1,516-1,521. – Aug 6, 2024
