What to expect on Bursa Malaysia this Wednesday

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

Inter-Pacific Research

Malaysian stocks underwent further pullback yesterday, falling in tandem with the weakness among most regional indices on weak China economic data that prompted further profit taking from the recent upsides.

The selling was widespread with the broader market shares also succumbing to renewed selling pressure. As a result, market breadth turned decidedly negative with losers more than doubled the number of gaining stocks.

Traded volumes, however, remained steady at around 4.0 billion shares.

The recent run-up seemed to have run its course with yesterday’s pullback that left the key index at the 1,455 support level.

In the same vein, it also appears that the market is finding the 1,462-1,463 levels a formidable level to clear in the near-term amid the lack of fresh leads, both from domestic and global sources.

For now, market players are scouring for new leads after the conclusion of the latest round of corporate results but market valuations have also tipped up to near fair values following the upsides from the start of 2H 2023, nullifying the positivity from the lower inflationary pressures and the corresponding lower odds of further interest rate hikes.

As a result, the key index is likely to continue drifting for the time being, hovering near the 1,450 levels as it continues to build up a base around the psychological level with market players assessing their next moves,

In the meantime, the 1,462-1,463 levels serve as the immediate hurdle, followed by the 1,472 level. The supports are at 1,450 points and 1,443 points respectively.

Malacca Securities Research

Profit taking activities persisted on both the local and global stock markets after a significant rally over the past few weeks.

We believe traders may stay cautious as the 10-year US Treasury spiked following the jump in oil price (due to supply cuts from Saudi and Russia towards end-December).

With both the Treasury yield and oil price on a rising formation, the market could be expecting that the US Federal Reserve may stay slightly hawkish in the near term, thus posing downside risk towards the stock markets.

Also, traders may monitor the developments on the two Johor by-elections that will be held this weekend.

Commodities-wise, Brent crude surpassed the US$90/barrel mark while crude palm oil (CPO) prices are trading in a pullback phase below RM4,000/metric tonne.

The FBM KLCI had formed a bearish bar after hitting the resistance around 1,460-1,465 for the third time. The technical indicators are weakening but staying above the positive region with the RSI being above 50 while the MACD Histogram extended another positive bar.

Resistance is located around 1,465-1,470 while the support is set around 1,430-1,440. – Sept 6, 2023

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