KUALA LUMPUR: Bursa Malaysia is poised to retest the 1,670 level next week on improved sentiment as the latest US jobs data point to a softening labour market, keeping hopes for an interest rate cut expected by markets elevated.
UOB Kay Hian Wealth Advisors head of investment research Mohd Sedek Jantan said that while the latest US nonfarm payrolls report showed a lower-than-expected increase of 142,000 jobs last month, the recent jobless claims report from there showed a decline to 227,000 from 232,000. This suggested that layoffs remained low and that the American labour market slowdown was orderly.
"Despite the mixed US economic data, recession concerns seem overstated," he said, seeing a gradual improvement in market sentiment as the week progresses. He added that this week's domestic market setback offers a compelling buying opportunity due to more attractive valuations. However, he said investors should remain aware of the market's heightened sensitivity to US economic data.
"The market now expects a significant 50 basis points rate cut this month, based on CME Fed Watch data following the nonfarm payrolls report. Any deviation from these expectations could trigger volatility," he warned.
In this context, he expects a shift in investor focus towards fundamentally strong companies with high dividend yields and defensive sectors.
Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng said from a technical standpoint, the 20-day and 50-day exponential moving averages (EMAs) are both trending upward, with the index staying above them. This signals a continued bullish trend in the short and medium term, though the proximity to the 20-day EMA hints at potential consolidation.
"As such, we anticipate the FBM KLCI to trend within the range of 1,650-1,670 for next week with immediate support at 1,650 followed by 1,630 and resistance at 1,670 followed by 1,700," he said.
Bursa Malaysia traded in the red for the whole week as the softening US labour market also sparked concerns over the outlook of the global economy. Meanwhile, Bank Negara Malaysia kept the overnight policy rate unchanged at 3.00 per cent, providing some support to key heavyweights mainly financial counters.
On a Friday-to-Friday basis, the FBM KLCI lost 25.68 points to 1,653.12 from last week's 1,678.80.
On Bursa Malaysia's index board, the FBM Emas Index lost 208.20 points to 12,276.06, the FBMT 100 Index erased 110.37 points to 12,077.25 and the FBM Emas Shariah Index shrank 301.46 points to 11,985.21.
The FBM 70 Index was weaker by 349.47 points at 17,094.45 and the FBM ACE Index dropped 31.64 points to 5,084.45.
Sector-wise, the Financial Services Index slid 115.06 points to 19,602.47, the Plantation Index shed 69.79 points to 7,243.40 while the Industrial Products and Services Index retreated by 6.10 points to 175.30. The Energy Index slipped 51.51 points to 875.19.
For the week just ended, turnover slipped to 14.90 billion units valued at RM15.33 billion versus 17.60 billion units valued at RM20.66 billion in the preceding week.
The Main Market's volume decreased to 8.66 billion shares worth RM14.01 billion against 10.26 billion shares worth RM19.34 billion a week ago.
Warrant turnover dropped to 3.60 billion units valued at RM413.23 million from 4.87 billion units valued at RM580.71 million last week.
The ACE Market's volume, however, increased to 2.65 billion shares worth RM906.43 million from 2.44 billion shares worth RM740.85 million previously.