KUALA LUMPUR: Bursa Malaysia is expected to retrace its gains from last Friday as investors turn their attention to the outcome fo the US Federal Open Market Committee meeting that concludes on Wednesday.
At the start of the week's trading, Malaysia's benchmark FBM KLCI was down 3.55 points to 1,408.18 on the heels of Wall Street's negative performance in the previous session.
Kenanga Research noted that the Fed decision in reaction to the latest developments in the US banking sector will be in sharp focus over the coming days.
"Policymakers will have to find a tricky balance between combating inflation (by raising interest rates further) and preventing the spread of contagion effects following the recent spate of bank failures in the US (chiefly triggered by rising interest rates).
"Interestingly, consensus view has now swung back to a 25-basis point hike in the federal funds rate (with a probability of 62%) vis-à-vis an anticipated increase of 50 basis points just a week ago," said the research firm.
From a technical standpoint, Kenanga was bearish over the continuation of the relief rebound that started in the previous week.
"With the stochastic indicator still stuck in the oversold territory, the declining Parabolic SAR trend is suggesting that a resumption of the negative momentum is probable.
"From a charting standpoint, the FBM KLCI could shift downwards and test again our first support threshold of 1,395, a break of which may then push the bellwether towards its preceding trough of 1,373 that was hit in mid-October last year.
"Our next support line is currently identified at 1,355 while the immediate resistance hurdle to counter any intermittent run-up is set at 1,440," it said.
On the blue-chip index, selling pressure in PETRONAS Chemicals pushed down the market as it slid 25 sen to RM6.98.
Investors searched for direction with banks as Maybank slid one sen to RM8.37 and CIMB dropped four sen to Rm5.18 while Public Bank was unchanged at 3.97 and Hong Leong Bank remained untraded.
In plantations, IOI dove 11 sen to RM3.80, Kuala Lumpur Kepong dopped six sen to RM21.50 and Sime Darby Plantation
slid two sen to RM4.25.
Meanwhile other stocks that saw notable declined included Westports falling 10 sen to RM3.70, Gamuda dropping 10 sen to RM4.17, Bursa sliding eight sen to RM6.42 and MAHB losing eight sen to RM6.85.
Top actives were Minda unchanged at 14.5 sen, Hong Seng up 0.5 sen to 15 sen and Jade Marvel 1.5 sen to 31.5 sen.
