Market likely to continue downtrend

BURSA Malaysia will likely continue its downtrend this week on gloomy investor sentiment as well as profit-taking ahead of the Hari Raya holiday, said analysts.

An analyst told Bernama the macro factors expected to affect the FBM KLCI this week includes the Group of Seven meeting as investors search for clues on the trade outlook as well as the timing of the next interest rate hike by the US Federal Reserve which meets tomorrow.

“Investors believe any move will have a spillover effect on emerging markets like Malaysia and likely turn interest away from the equity market.

“Due to the volatile market sentiment, the local benchmark index is likely to trade sideways in testing the 1,730 and 1,740 support levels over this weekly session,” he said.

Another analyst said the market’s performance would also depend on the ringgit’s movement against the US dollar as well as that of global oil prices.

“The current downtrend in oil prices is not only due to growing supply but also an indication by Saudi Arabia and other big producers to increase output,” she told Bernama.

On a Friday-to-Friday basis, the benchmark FBM KLCI was 21.94 points higher at 1,778.32 from 1,756.38.

The FBM Emas Index increased 237.17 points to 12,473.07, the FBMT100 Index rose 216.60 points to 12,270.56.

The FBM 70 gained 486.20 points to 14,928.36 and the FBM Emas Shariah Index improved 245.39 points to 12,465.60.

The FBM Ace advanced 245.85 points to KUALA LUMPUR

The FBM KLCIfutures contract on Bursa Malaysia Derivatives will likely be on a downtrend this week, tracking the weaker performance of the underlying cash market.

An analyst told Bernama that the futures prices might also start on a weak note this week if Wall Street continued its downtrend.

He said investors are likely to stay on the sidelines on continued concerns over external factors, including the outcome of the G7 (Group of Seven) meeting for clues on the trade outlook, as well as the timing of the next interest rate hike by the US Federal Reserve (Fed) which meets on June 12.

“Investors are reluctant to take heavy KUALA LUMPUR

Gold futures contracts on Bursa Malaysia Derivatives could see volatile trade this week, influenced by the US Federal Reserve (Fed) meeting, a dealer said.

Phillip Futures Sdn Bhd dealer Tee Guy Eon said gold prices are expected to trade sideways ahead of a decision on interest rates by the Fed and which is set to be announced on Thursday at 2 am Malaysian Time. KUALA LUMPUR

The ringgit is expected to be influenced by external factors this week with major events happening in the monetary and geopolitical space, a dealer said.

OANDA Head of Trading in Asia-Pacific Stephen Innes said the market would be buckling up for a busy week ahead from the US central bank policy meeting to one of the most geopolitically essential summits, the Trump-Kim summit, in Singapore.

“The market is going in with a positive vibe, but which makes the tail risk that much more significant, if talks collapse,” he told Bernama.

He said investors would also monitor the development of trade talks from the Group of Seven (G7) and ongoing US-China trade negotiations, as well as outcome from the US Federal Reserve (Fed) and European Central Bank’s (ECB) meetings.

Innes said the Fed is widely expected to announce an interest rate hike this Wednesday, but investors would be keeping to forward guidance, for clues as to whether it could raise rates a fourth time this year.

“The market will also be watching the ECB's meeting as it is widely expected that the removal of quantitative easing would be discussed. WEEKLY FBM KLCI 5,295.40.

On a sectoral basis, the Finance Index rose 260.87 points to 17,877.90 and the Industrial Index went up 37.36 points to 3,202.18.

But the Plantation Index fell 39.29 points to 7,660.97.

Weekly turnover widened to 16.16 billion units worth RM14.38bil from 13.32 billion units worth RM18.79bil.

Main Market volume increased to 10.38 billion shares worth RM12.86bil from 9.08 billion shares worth RM18.13bil.

Warrants turnover improved to 3.33 billion units valued at RM790.33mil versus 2.85 billion units valued at RM464.73mil.

The Ace Market volume improved to 2.45 billion shares worth RM537.69mil from 1.38 billion shares worth RM200.66mil. — Bernama

FBM KLCI FUTURES

positions following the lack of catalysts that can actually boost their confidence in the market,” he added.

For the week just-ended, the FBM KLCI futures contract traded mixed in tracking the performance of the underlying cash market.

On a Friday-to-Friday basis, June 2018 and July 2018 rose 27 points each to 1,775.0 and 1,774.5 respectively.

September 2018 added 29.5 points to 1,776.0 and December 2018 bagged 25.5 points to 1,770.0.

Turnover for the week fell to 45,971 lots from 105,219 lots, while open interest declined to 38,770 contracts from 38,954 contracts. – Bernama

GOLD FUTURES

“After the announcement, a trend could be expected as prices break out from their range in either direction,” he told Bernama.

On a Friday-to-Friday basis, June 2018, July 2018, August 2018 and September 2018 fell 21 ticks each to RM166.10, RM166.45, RM166.55 and RM166.60 respectively.

Weekly turnover declined to four lots worth RM33,310 from 10 lots worth RM167,170, while open interest was lower at 35 contracts from 36 contracts. – Bernama

MONEY MARKET

“This week is massive. I expect the current range to hold, but with the USD/MYR to gravitate to the top side of the spectrum, exposing a possible move through 4.00 (ringgit vis-Ã -vis US dollar) if the Trump-Kim summit fails and either the ECB or the Fed are more hawkish than expected,” he added.

Meanwhile, FXTM Global Head of Currency Strategy and Market Research Jameel Ahmad said locally, investors would be monitoring the retail sales figures to be released tomorrow.

“The retail sales data is seen as a crucial indicator of consumer sentiment and a stronger than expected reading would help improve optimism that the Malaysian economy can expand above 5% in 2018.

“The current forecast is that retail sales should have increased by around 8% in April,” he added.

On a Friday-to-Friday basis, the local note eased against the greenback to 3.9870/9900 from 3.9770/9800. It declined against the Singapore dollar to 2.9836/9881 from 2.9728/9761 and depreciated against the yen to 3.6468/6505 from 3.6393/6430.

The local note weakened vis-a-vis the British pound to 5.3482/3534 from 5.2902/2946 and decreased against the euro to 4.6903/6946 from 4.6551/6594. – Bernama