Despite the rising positive sentiment in the global markets, the FBM KLCI (-0.09%) closed marginally lower as profit-taking activities emerged in selected banking heavyweights such as PBBANK (-5.0 sen) and CIMB (-7.0 sen).
According to Malacca Securities (MSSB) in a note today (Sept 13). in the broader market, the Technology sector (+2.82%) was the best performer.
The Day Ahead
The FBMKLCI declined marginally, but the Small Cap index managed to rebound as bargain hunting activities emerged in tandem with the crude oil price.
Meanwhile, Wall Street managed to trade higher for the fourth session, despite core PPI data came in slightly above consensus estimates at 0.3%.
Unemployment claims were also modestly higher, which gave rise to the market to continue speculate that the Fed will be introducing a rate cut next week.
At this juncture, the expectation of the cut is at least 25 bps. In the commodities market, Brent oil continues to rebound, traded above USD72 as Hurricane Francine's may affect the supply in the near term, while the gold price shot towards new high above the USD2555 level awaiting the rate cut next week.
The crude palm oil was positive but still below RM3,900.
Sector Focus: The rebound in the US may spillover to stocks on the local front, specifically in the tech sector as they are significantly oversold, but upside may be capped due to the strong ringgit environment, where the earnings may be softer in the upcoming quarters.
Meanwhile, on the flip side, the elevated RM tone could help their domestic sector such as Consumer, Financial and selected Utilities.
MSSB also favoured Construction and Building Materials as we believe the data center projects may start to materialise into earnings of the construction sector going forward.
Bloomberg FBMKLCI Technical Outlook
The FBM KLCI index closed lower towards the 1,638 level.
Additionally, the technical readings on the key index were negative, with the MACD histogram forming another negative bar and the RSI dipping below 50.
The resistance is envisaged around 1,653-1,658 and the support is set at 1,618-1,623.