KUALA LUMPUR (May 25): The FBM KLCI is expected to extend its losses today in line with the overnight slump at most global markets, with immediate support at 1,750.
Shares sank worldwide on Thursday as U.S. President Donald Trump canceled a planned June meeting with North Korean leader Kim Jong Un, while tariff fears hit auto stocks and safety buying ramped up, according to Reuters.
Trump, in a letter to North Korea released by the White House, called off the June 12 summit, citing "tremendous anger and open hostility" in a recent statement by Pyongyang. The cancellation came even after North Korea followed through on a pledge to blow up tunnels at its nuclear test site, it said.
On Wall Street, the Dow Jones Industrial Average fell 75.05 points, or 0.3 percent, to 24,811.76, the S&P 500 lost 5.53 points, or 0.20 percent, to 2,727.76 and the Nasdaq Composite dropped 1.53 points, or 0.02 percent, to 7,424.43, said Reuters.
AllianceDBS Research in its evening edition Thursday said that dampened by the down close in the preceding day, the FBM KLCI had on May 24 broken below the 1,800 mark to reach a low of 1,768.18 as market participants continued to play on the selling side in anticipation of a lower market.
It said under the persistent selling interest, the benchmark index was in the red throughout most of the trading sessions before settling near the day’s low at 1,775.66 (down 28.59 points or 1.58%).
“In the broader market, losers outnumbered gainers with 752 stocks ending lower and 235 stocks finishing higher. That gave a market breadth of 0.31 indicating the bears were in control,” it said.
AllianceDBS Research said the market saw selling activity again on May 24 with the benchmark index breaching the 1,800 level to reach the lowest low of 1,768.18 since 3 Jan 2018.
It said like May 23, a buying attempt on the opening bell was initiated with an opening level higher than previous day’s settlement of 1,804.25.
“However, there was no follow through buying support to carry the market much higher.
“With market sentiment still adversely affected by the heavy sell off on May 23, market participants continued to sell into the market.
“In the last 2 days of market crashes, there were no strong recoveries toward the end of the trading day.
“This suggested that market participants were still not in a hurry to acquire those beaten down stocks for fear of more market declines.
“Basically, market participants chose not to fight the flow of the market when everyone was feeling jittery about the market environment,” it said.
The research house said this explained why the market gained momentum to fall so hard after seeing the benchmark index losing its fort at 1,800.
It said following the down close on May 25, there should be selling attempt again with immediate support at 1,750.
“The analysis of overall market action on May 24 revealed that buying power was weaker than selling pressure.
“As such, the FBM KLCI would likely trade below the 1,768.18 level on May 25,” said AllianceDBS Research.
Based on corporate announcements and news flow yesterday, stocks in focus today may include the following: Media Prima Bhd, Axiata Group Bhd, UOA Development Bhd, Ta Ann Holdings Bhd, Lii Hen Industries Bhd, AirAsia Bhd, Ajinomoto (Malaysia) Bhd, Sunsuria Bhd, WCE Holdings Bhd, Sime Darby Property Bhd, Genting Bhd and MBM Resources Bhd.