PETALING JAYA: Bursa Malaysia is expected to trade on a cautious note this week given the major change in the macro situation following the United States higher-than-expected inflation print, which would push back the interest rate cut expectation.
Rakuten Trade equity research vice-president Thong Pak Leng expects the benchmark FBM KLCI to stay on consolidation mode this week until more clarity surfaces.
“Our market under-performed last year, so this year it will play catch-up. Hence, the chance to perform better is there but we have to look at the US interest rate,” he told Bernama.
“With the higher-than-expected US inflation in December, economists predict that the Federal Reserve is unlikely to cut interest rates in March, with many anticipating the central bank to postpone such a move until its May meeting,” he added.
From a technical perspective, Thong said the FBM KLCI had retraced after surpassing the 1,500-resistance level last Tuesday, and despite the inability to hold above 1,500 and the emergence of two consecutive black candles thereafter, this is a healthy correction for a more sustainable uptrend.
“As such, we expect the benchmark index to move sideways with an upward bias within the 1,475-1,495 range for this week with immediate support at 1,475 followed by 1,465,” he added.
For the previous week, the FBM KLCI traded mostly higher. It reached almost a one-year high and breached the 1,500 level last Tuesday, as investors closely monitored the US consumer price index data last Thursday.
The FBM KLCI was also supported by brisk buying in selected heavyweights.
On a Friday-to-Friday basis, the barometer index inched down 0.27 of-a-point to end the week at 1,487.34 versus 1,487.61 previously.
Sector-wise, the Energy Index rose 25.89 points to 865.71, the Plantation Index rose 71.01 points to 7,101.93, the Industrial Products and Services Index eased 1.14 points to 175.85, and the Financial Services Index trimmed 32.29 points to 16,550.04.
Weekly turnover improved to 27.09 billion units worth RM16.66bil versus 23.54 billion units worth RM12.68bil in the preceding week.
