The market declined last week on bearish performances in global markets after US President Donald Trump’s move to increase aluminium and steel tariffs, sparking fears of a global trade war.
Market sentiment was weak despite Bank Negara’s decision to maintain its Overnight Policy Rate (OPR) last week. The FBM KLCI declined 0.6 per cent in a week to 1,843.92 points last Friday.
Trading volume fell as market takes a back seat. The average daily trading volume fell to 2.6 billion shares from three billion shares two weeks ago.
The average daily trading value fell to RM2.6 billion from RM3.1 billion.
Foreign institutions were net sellers while the biggest net buyers were local retail. Net buy from local retail was RM205 million and RM94 million from local institution. Net sell from foreign institutions was RM299 million.
In the FBM KLCI, decliners beat gainers five to two last week. The top gainers for the week were Nestle (M) Bhd (15.2 per cent in a week to RM145.00), Maxis Bhd (1.9 per cent to RM5.92) and Axiata Group Bhd (1.9 per cent to RM5.43). The top decliners were Press Metal Bhd (9.1 per cent to RM4.97), Petronas Dagangan Bhd (six per cent to RM24.32) and Hong Leong Bank Bhd (5.1 per cent to RM18.50).
Global markets were generally bearish last week. The decline, however, was not significant across the board. US Dow Jones Industrial Average closed firm and most markets indices fell about one per cent in a week.
China’s Shanghai Stock Exchange Composite Index closed higher.
The US dollar Index remained firm at 90.10 points last Friday as compared to the previous week.
The Malaysian ringgit was slightly weaker against the US dollar at RM3.91 last Friday as compared to RM3.90 the week before.
Price performances of commodities were mixed. Gold (COMEX futures) was firm at US$1,324.00 an ounce last Friday as compared to the previous week. Brent crude oil futures increased 1.4 per cent to close at US$65.49 per barrel.
Crude palm oil futures fell 3.8 per cent in a week to close at RM2,376 per metric tonne, the lowest since August 2016.
The FBM KLCI declined for two weeks after facing resistance at 1,870 points two weeks ago. However, the index is still above the support level at 1,800 points and this indicates that the market is still in a bullish trend.
Technically, the FBM KLCI has fallen below the short term 30-day moving average and this indicates that the trend has turned slightly bearish in the short term.
However, in the intermediate and long term, the index is still above the 200-day moving average and the Ichimoku Cloud indicator.
Momentum indicators like the RSI and Momentum Oscillator continued to decline and are trading at their mid-levels. Furthermore, the index has also fallen below the middle band and the MACD indicator continued to decline.
Therefore, the technical indicators indicate that the FBM KLCI is currently in a bullish trend correction.
The support level for the bullish trend is at 1,800 points and as long as it can stay above this level, the trend may continue to be bullish.
The market sentiment may turn strongly bullish if the FBM KLCI can break above the resistance level at 1,870 points. However, we may not see this happening in the near term as the market may remain cautious as the general election draws near.
Therefore, expect the market to continue be directionless with the index trading between 1,800 points and 1,870 points. This week, we expect the index remain weak and probably shed a few points as correction is expected to continue.
The above commentary is solely used for educational purposes and is the contributor’s point of view using technical al analysis. The commentary should not be construed as an investment advice or any form of recommendation. Should you need investment advice, please consult a licensed investment advisor.