Will KLCI in Bullish Movement by Potential Rebound in Crude Oil Price?

The week started with bearish sentiments and traded range bound thorough the week and ended on a positive note on Friday. The FBM KLCI index gained 33.27 points or 2.04% on Friday. The Finance Index increased 1.56% to 13882.41 points, the Properties Index up 1.24% to 1111.47 points and the Plantation Index rose 4.51% to 7916.2 points. The market traded within a range of 36.18 with a high of 1667.80 and a low of 1631.62 during the session. 3 Days Free Trial Signals

The KLCI surged and closed higher at 1667.80 points amid overnight gains in US market after oil prices rose for the third consecutive day. The performance of our local bourse was in tandem with most of our regional peers following the Bank of Japan unexpectedly eased monetary policy further by introducing a negative interest rate policy. 

Market Forecast for week ahead:

The KLCI index is expecting it to continue its bullish movement in coming week on the back of the expectation of the potential rebound in the Crude Oil price, however the market can take resistance at the level of 1675 and the crossover of this level can lead to a bullish movement in near term and after that the market can test the level of 1700.

Technical indicators:

RSI for this week is 49.312 with CCI at -35.876. Besides, difference line of MACD -14.041.

Global factors and World Indices

• Asian shares jumped on Friday and the yen swooned after the Bank of Japan stunned markets by adopting negative interest rates in its boldest step yet to reinflate the long-languishing economy.
• The yen fell across the board and sovereign bonds rallied after Japan's central bank said it would charge 0.1 per cent for excess reserves parked with the institution, an aggressive policy pioneered by the European Central Bank.
• China stocks rose more than 3 per cent on Friday, recovering losses at the end of a tumultuous week, having recorded their worst month since the global financial crisis.The CSI300 index of the largest listed companies in Shanghai and Shenzhen ended up 3.2 per cent.
• Hong Kong stocks rallied Friday, ending a volatile month on a high, after Japan announced a surprise negative interest rate policy, effectively charging banks to store their cash in a bid to kickstart lending in the country.The Hang Seng Index rose 2.54 per cent, or 487.28 points, to close at 19,683.11.
• Japan's Nikkei share index whipsawed after the announcement before ending up 2.8 percent, to mark a 3.3 percent weekly gain, while the benchmark 10-year JGB yield touched an all-time low of 0.090 percent.
• Australian shares ended 0.6 per cent higher on Friday in see-saw trade, after the Bank of Japan unexpectedly slashed its benchmark interest rate below zero and a rebound in Chinese stocks.The S&P/ASX 200 index rose 29.34 points at the close of trade .
• Bank lending in Singapore fell in December from the previous month, reflecting a contraction in business loans.Loans through the domestic banking unit - which essentially captures lending in all currencies but mainly reflects Singapore-dollar lending - stood at S$600 billion last month, down 0.7 per cent .
• The Bank of Japan on Friday adopted a negative interest rate policy to spur lending and help drive inflation towards its two-percent target.The -0.1 per cent interest rate introduced by the BoJ means that banks parking their money with the central bank are actually charged for doing so.
• The dollar rallied over 1% to one-month highs against the yen on Friday, after the Bank of Japan surprised markets by announcing a negative interest rate policy.
• Gold slid lower on Friday, as investors locked in profits from the precious metal’s recent climb to one-and-a-half month highs and as the stronger U.S. dollar weighed
• Oil extended a recent rally in Asia on Friday, boosted by weakness in the dollar and Russia saying it could meet the Opec producers' group for talks on possible output cuts to ease a painful supply glut.

KLCI Market Expected to Trade Sideways in Coming Days, Properties Index Dropped

Market Review for KLCI:

The FBM KLCI index lost 39.14 points or 2.31% on Monday. The Finance Index fell 1.82% to 13902.09 points, the Properties Index dropped 1.69% to 1167.5 points and the Plantation Index down 1.53% to 7503.42 points. The market traded within a range of 34.52 points between an intra-day high of 1687.89 and a low of 1653.37 during the session. 3 Days Free Trial Signals

The KLCI extended its midday losses by ending lower 1653.37 points amid overnight losses in Wall Street. The performance of our local bourse was in tandem with most of our regional peers.

Market forecast for KLCI:

The KLCI market is expected to trade sideways in coming session, however if it breaks the level of 1650 with strong bearish sentiments followed by the dropping market volume then it may test the level of 1630 in near term.

KLCI COUNTER SPECIFIC NEWS :

• SKB Shutters Corp Bhd is projecting growth for the 2017 fiscal year, driven by its new insulated fire shutter and insulated fire rated steel door products.
• Penang’s construction industry is expected to stay flat this year with a value of about RM6.8bil, which is almost the same as in 2014.
• Ekovest gained six sen to RM1.13. It is linked to Tan Sri Lim Kang Hoo since his brainchild Iskandar Waterfront Holdings (IWH) makes up part of the consortium that won the Bandar Malaysia bid from 1Malaysia Development Bhd (1MDB).
• Petronas Dagangan fell 20 sen to RM24.66 with 400 shares done while Petronas Chemicals was down 11 sen to RM7.16 with 200 shares traded.
• CIMB Equities Research said integrated environmental engineering and technology provider Cypark Resources core net profit for the financial year ended Oct 31, 2015 made up 96% of its full-year forecast.

GLOBAL FACTORS AND WORLD INDICES:

• Asian stock markets tumbled while safe haven assets and oil prices jumped Monday in the first full day's trade of 2016 as a flare-up in tensions between Iran and Saudi Arabia raised concerns about the volatile Middle East.
• China's benchmark CSI300 share index tumbled 7 per cent on the first session of 2016 on Monday, prompting the stock exchange to halt trading for the rest of the day.The "circuit breaker" suspension mechanism first came into effect on Monday.Stocks slumped after weak factory activity surveys soured hopes that the world's second-largest economy will enter the new year on better footing, and selling intensified throughout the day.
• Hong Kong stocks posted their biggest fall in three months on Monday, marking a gloomy start for 2016, pulled lower by slumping mainland shares and weak global markets.The Hang Seng index fell 2.7 per cent, to 21,327.12, registering its biggest one-day per centage fall since Sept. 29.
• Australian shares fell on the first trading day of 2016 as a sell off in Chinese equities dampened risk sentiment, though gains in energy and healthcare shares capped losses.The S&P/ASX 200 index dipped 0.3 per cent or 16.85 points to 5,279.0 , on disappointing factory activity surveys in China.
• The Singapore economy grew at a better-than-expected 2.0 per cent on a year-on-year basis in the last quarter of 2015, advanced estimates show, and is expected to register a full-year growth of 2.1 per cent in 2015.The growth was a clip faster than the third quarter's 1.8 per cent, and on a quarter-on-quarter seasonally adjusted annualised basis, the economy expanded at a faster pace of 5.7 per cent compared to the 1.7 per cent growth in the preceding quarter.
• China's factory activity contracted for the 10th straight month in December, and at a sharper pace than in November, a private survey showed, dampening hopes that the world's second-largest economy will enter 2016 on steadier footing.The Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) slipped to 48.2 in December, below market expectations for a slight pick-up to 49.0 and down from November's 48.6.
• China's yuan weakened against the dollar at its open on Monday after the central bank set the guidance rate at a more than 4-1/2-year low.Prior to market open, the People's Bank of China set the yuan midpoint rate at 6.5032 per dollar - its lowest level since May 2011, 0.15 per cent weaker than the previous fix of 6.4936.
• Oil prices jumped over 2 per cent in the first trading hours of 2016 as relations between Middle Eastern rivals Saudi Arabia and Iran deteriorated following Riyadh's execution of a prominent Shi'ite Muslim cleric.Global oil benchmark Brent climbed over 2.5 per cent and more than a dollar.
• Gold and silver climbed on the first trading day of 2016 as rising tension between Saudi Arabia and Iran spurred a return to haven assets.Bullion for immediate delivery rose as much as 0.9 per cent, for its biggest gain since Dec 21. The metal lost 10 per cent in 2015 for a third annual drop, the longest slump since 2000.