KUALA LUMPUR: The FTSE Bursa Malaysia KLCI (FBM KLCI) is likely to test the 1,700-level next week, tracking the positive performance of global equity markets, driven mainly by dovish US Federal Reserve (Fed) sentiment, said Phillip Capital Management.
Asia-Pacific senior vice president (investment) Datuk Dr Nazri Khan Adam Khan said the US equities market ongoing uptrend is a reflection of the Fed’s statements, which is done to create balance ahead of the US-China trade deal discussion, scheduled to take place during the G20 Summit later this month.
“Developments by the Fed have also caused the US government bond yields to reach their lowest level seen since the past three years while the dollar continues its decline.
“We believe with increasing uncertainties towards the global economic outlook, investors are hopeful for a rate cut to follow through next month,” he told Bernama.
Technically, the encouraging momentum over the last one week had sent the FBM KLCI above the medium-term downtrend line.
This reflected positive continuation of the bullish bias since the index rebounded firmly above the 50-day moving average line last month, while the “positive divergence” pattern suggested a change of trend from downside towards upside, he said.
Nazri Khan also said the recent bullish run spread to commodities whereby the energy sector was the best performer in the S&P 500 Index as it observed Brent crude rise a whopping 3.6% – one of its best performance of the year.
The huge leap in the black gold’s value came after Iran’s reported shot down of a US surveillance drone which exacerbates tension between the two countries.
Bursa Malaysia traded on cautious mode earlier in the week as investors adopted a wait-and-see attitude for the Fed’s interest rate cut and subsequently climbed as the Fed kept its interest rate unchanged.
Investors believed a rate cut would happen sooner rather than later.
The Bank of Japan also followed the Fed’s step to maintain status quo on its interest rate but the Japanese central bank said it could combine interest rate cuts with bigger asset buying if needed to keep the economy on track (to achieve its two per cent inflation target).
Bursa Malaysia’s positive market sentiment was also boosted by the announcement from US President Donald Trump that he would soon meet Chinese President Xi Jinping to discuss ways to ease their trade tensions.
On a Friday-to-Friday basis, the benchmark FBM KLCI surged 43.60 points to 1,682.23, hitting a more than a four-month high.
The FBM Emas Index jumped 284.86 points to 11,849.51, the FBMT 100 Index advanced 263.59 points to 11,704.01 and the FBM Emas Syariah Index jumped 422.18 points to 12,210.42.
The FBM Ace Index added 9.80 points to 4,397.34 and the FBM 70 rose 318.07 points to 14,699.1.
Sector-wise, the Financial Services Index put on 15.09 points to 16,746.56, the Plantation Index bagged 148.46 points to 7,019.54 and the Industrial Products and Services Index inched up 1.77 points to 162.12.
Weekly turnover increased to 10.56 billion units worth RM10.81 billion from 10.07 billion units valued at RM9.07 billion recorded last week.
Main Market volume fell to 6.14 billion shares worth RM9.58 billion versus 6.32 billion shares valued at RM8.11 billion.
Warrants turnover eased to 2.11 billion units worth RM584.28 million against 2.29 billion units valued at RM500.22 million.
The ACE Market volume soared to 1.84 billion shares worth RM633.37 million compared with 1.45 billion shares valued at RM455.11 million. — Bernama