Market poised to firm on positive leads

REVIEW: Bursa Malaysia began the new week on a soft note, with the FBM KLCI skidding 2.58 points to 1,766.59, extending the previous session’s profit-taking selling.

However, the declines were short-lived as a steadier overnight Wall Street the previous Friday helped soothe investors.

A spike in crude oil prices also aided the local sentiment.

Surprisingly, despite gains in energy shares across the region, major indices in the Asia Pacific got off to a subdued start as invesors adopted the “wait-and-see” attitude ahead of a slew of macro data due for releases from China, India, Japan and south Korea.

The firing of three short-range missiles by North Korea into the sea off its east coast meanwhile kept most market makers at bay.

While the strength of US markets bode well for the local bourse, an uninspiring performance in Asia was a drag.

Given the tricky global situation, trading on Bursa Malaysia was tepid as investors shied away from taking any big bets ahead of economic data from major countries.

Pending a clearer picture to emerge, the local market fluctuated between a fairly tight 6.2 points range throughout before ending almost flat, up 0.32 point to 1,769.49, largely contributed by advances in select quality issues.

Elsewhere most second and lower liners dropped on lack of support from retail players and it was reflected on the scorecard, with losers outpacing winners by 579 to 298 on Monday.

The Dow and the S&P 500-share index ended little changed on the downside the next day, dragged lower by banking and energy shares, while technology and healthcare issues gave a small boost to the Nasdaq counters.

On the Nymex, a backup in crude supplies sent the black commodity tumbling a hefty US$1.30 to US$46.57 per barrel.

Meanwhile, US stock futures turned sharply lower amid jitters after the Japanese and South Korean govenments said North Korea had fired a missile that passed over northern Japan early on Tuesday.

In the wake of deepening geopolitical uncertainty, markets in the region, with the exception of Shanghai Stock Exchange, tanked on renewed selling pressure.

At home, Bursa Malaysia was not spared and losses in the blue chips pulled the key index below the 4½-month-old ascending trendline to a one-month low of 1,761.14 in mid-morning but unlike the regional peers, the local market managed to turn sideways later as sporadic bargain hunting on weakness somewhat provided the cushion and checked the slides.

In lacklustre session, the local bourse settled down 8.35 points to 1,761.14 on Tuesday.

After a short breather, the bulls on overnight Wall Street overcame early weakness to end firmer as investors shrugged off hostilities in the Korean peninsula although North Korea said it will fire more missilies. However crude oil prices continued to struggle, easing an extra 13 cents to US$46.44 per barrel as declines in oil services companies are mostly offset by gains in refiners and some producers.

In the region, stocks were muted despite Wall Street’s higher close and the fact that the United Nations held back on any threat of new sanctions on North Korea while demanding Pyongyang halt its weapons programme.

Tracking the Asian trend, trading on Bursa Malaysia was decisively subdued and that was the pattern until the last hour where a fresh bout of aggressive bidding of the heavyweights emerged suddenly from the sidelines and propelled the FBM KLCI up 12.02 points to close at the day’s high of 1,773.16 on Wednesday, also the week’s best level.

Bursa Malaysia was shut for public holidays from Thursday and resumes business next Tuesday.

Statistics: Week-on-week, the benchmark index eked out a minor plus note, up 3.99 points, or 0.2% to 1,773.16 on Wednesday, compared with 1,769.17 on Aug 25.

Total turnover for the three-day holiday-curtailed week amounted to 5.059 billion shares valued at RM5.690bil, against 9.595 billion units worth RM9.549bil changed hands during the regular previous week.

Outlook: Usually, investors were reluctant to hold large or fresh positions over long holidays break but not this time round.

The late bout of frenzy bidding that emerged about 4pm on Wednesday, catching many people by surprise, was clearly done by the big boys as interest was very much gathered around the blue chips, led by big names such as CIMB Bhd, MISC Bhd and Axiata Group Bhd.

Whether the latest round of buying spree is just “one-off” or otherwise, we all will know pretty soon.

Nevertheless, there are compelling reasons to believe that the market will probably attract follow-through interest, thus moving the bulls to a higher ground in the immediate term. Theoretically, the index’s closing at the week’s highest level is interpreted as a bullish sign, which usually will clear the path for a rally. Other catalysts such as the prevailing positive domestic factors, improving global sentiment and easing geopolitical worries added to investors’ optimism.

Technically, indicators are slightly better, implying Bursa Malaysia may trade rangebound but with an upward bias in the week ahead.

Concrete floor is pegged at 1,750 points while heavy resistance is maintained at the 1,800-point psychological barrier.