Market Preview KLCI to trend sideways, but expected to charge higher this week

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KLCI to trend sideways, but expected to charge higher this week

By Surin Murugiah / theedgemarkets.com   | July 18, 2016 : 6:07 AM MYT

KUALA LUMPUR (July 18): The FBM KLCI is expected to trend sideways today, in line with the cautious sentiment at most global markets on the back of the truck attack in France and the failed coup attempt in Turkey which shocked equity markets last Friday.
European shares edged lower on Friday after at least 84 people died in an attack in France and U.S. stocks dipped from record peaks, while benchmark U.S. Treasury yields eased off three-week highs after the close of U.S. stock markets as Turkey's military said it had seized power.
Shares of European travel and leisure companies fell, weighing on the region's stock markets, after the attack in the city of Nice, which also injured scores of people.
Affin Hwang Investment Bank head of retail reseach Datuk Dr Nazri Khan  said going forward, he expects the local market to charge higher following Bank Negara Malaysia rate cuts, a rebound in price of oil, talks of Bank of Japan mega stimulus and delayed Federal Reserve interest rate hike, as well as significantly stronger ringgit.
“We note that the big focus in the markets was the shift in expectations that US interest rates could rise slower than had been previously expected due to impacts of Britain ending its EU membership,” he said.
Nazri, who is also president of the Malaysian Association of Technical Analysts, said that the local bourse should be catalysed by Bank Negara Malaysia’s surprise decision to reduce its Overnight Policy Rate (OPR) to 3% from 3.25% during its Monetary Policy Committee meeting.
“Overall, given the buoyant mood coming from global markets as well as positive catalyst coming from the domestic front, we reckon that the FBM KLCI could be poised to trend upward this week to break out from its consolidation zone,” he said.
Nazri said the upside resistance and downside support were now spotted at 1700, 1680 and 1650, 1630 levels respectively. 
“Given the positive technicals, we continue to believe the index is ready to bounce and could stage further strength if ringgit and commodities continue to strengthen,” he said.
Based on corporate announcements and news flow last Friday., companies that may be in focus today could include: AMMB Holdings Bhd, SKP Resources Bhd, China Automobile Parts Holdings Bhd, Magna Prima Bhd and Axiata Group Bhd.