Chance that the benchmark FBM KLCI will break past its immediate resistance barrier of 1,465 today

There is a chance that the benchmark FBM KLCI will break past its immediate resistance barrier of 1,465 today. If so, then the bellwether could be climbing towards the next resistance line of 1,495 ahead.

This follows a positive overnight performance by Wall Street. Major U.S. equity indices jumped between 2.5% and 3.0%, lifted by hopes that the U.S. President would be announcing a US$300b economic stimulus package later tonight. Back home, on tap today are:

1. Bank Negara Malaysia’s monetary policy committee meeting, which is expected to leave interest rates unchanged; and
2. external trade statistics for Jul with one media survey projecting an annual rise of 6.6% for exports and 5.9% for imports, translating to a monthly trade surplus of RM7.7b.

Separately, Fututech will be in the limelight after it has received an unconditional takeover offer to acquire its shares at RM0.50 each (versus its last done price of RM0.485) and warrants at RM0.09 each (versus the existing warrant price of RM0.13).

Asian equities may show a sense of calmness today after coming under selling pressures

Although Wall Street fell last night (with its key stock indices down between 0.3% and 0.9% at the closing bell), Asian equities may show a sense of calmness today after coming under selling pressures yesterday.

Back home, we expect the benchmark FBM KLCI to recover parts of its 20-point (or 1.3%) cumulative loss suffered over the past two days. Nevertheless, from a technical perspective, the bellwether will probably struggle to break past the immediate resistance threshold of 1,465 ahead.

Stocks that could get a lift today include:

1. Alam Maritim, which has signed a charter party agreement for the provision of vessel and tug transportation services valued at up to RM221m; and
2. Taliswork after clinching sub-contract works for a dam expansion project in Penang worth RM339m.

Brace for more selling pressures today

Brace for more selling pressures today. While Wall Street was closed for a holiday last night, the futures market has given a warning of further downsides ahead. The Sep futures contract for the bellwether DJIA slumped to hover at a 300-point discount to the spot rate at 8 o’clock this morning.

The bearish external sentiment – clouded by persisting concerns on the European sovereign debt crisis – could open the way for the key FBM KLCI to drop deeper. The benchmark index is expected to back off from its support-turned-resistance level of 1,465 to the next support line of 1,435 ahead.

With capital preservation a top priority these days, most investors may only be interested in stocks that offer visible returns, such as DXN Holdings, which has received a conditional takeover offer to acquire its shares in cash at RM1.75 per share (versus its last traded price of RM1.42).