ZLBT Chats

Wednesday, April 8, 2009

FKLI And FCPO Market Outlook 08 April 2009

US MARKET Overnight DJIA tumbled the most in recent days as earnings season is expected to be bad as well for the upcoming quarter. The DJIA gave back 186 points, -2.34% to settle way below the 8000 level. In accordance with the revised downward in the earnings for energy sectors, crude oil dropped nearly USD 4 also contributed to the lost in DJIA. Technically, the DJIA turn slightly negative if it unable to regain the 8000 level in the near term.

We revise our view of the DJIA to cautious, but still positive in accordance with the prediction of the weak earnings season and base on technical outlook.
(Reminder: US will release its Consumer Confidence data later tonight, the Bloomberg Poll showed that they are expecting unchanged in the data)
The cash composite was riding on a rollercoaster ride which rolling from lowest 913 to highest 924 yesterday. KLCI eased about 4points to 919.84 with 803M shares valued at RM1.219B changed hand. In the meantime, the April contract shrink about 9points to 917.50. Total volume reduced from 11,360 to 8,352 while open position increased from 19,551 to 20,730 in a lackluster trading yesterday. Asian stocks fell, snapping a rally that drove valuations to the highest levels since November 2007, on lower commodity prices and renewed concern that loan losses will swell at financial companies.
As a result Regional market ended on a mix note yesterday as Nikkei was -25 to 8,832 and HSI was -69 to 14,928. After yesterday’s by-election, we are in the view that the FKLI has reached its top at the moment, the recent strong surged and the lack of fresh lead in the market going forward may cause the FKLI to retreat in the near term.

Temporary, we expect April contract might trade at a range bound within 929 - 907 judging on upper and middle (MA) Bollinger band, while current RSI is climbing towards overbought zone.. We maintain our call of selling into strength and buyers need to be cautious on their long position. Immediate resistance can be seen at 932 while support would be pegged at 916 followed by 906
The crude palm oil futures opened RM15 lower tracking on weak overnight soy but was off low midday on stronger soyoil futures in after-hour trade. In addition, end March palm oil inventories down to 1.5 millions tones as oil palm replanting program gather pace causing the benchmark June contract ended RM35 higher at RM2180/MT. Turnover increased to 8,946 lots from 7,783 lots while open interest shrunk to 25,502 contracts from 28,130 contracts.
Other Highlight(s): -
Speculative selling pressure and losses in equity and other gain markets pressured CBOT soybeans Tuesday, pushing the market into the red. May soybeans fell 4 ½ cents to $9.89 ½ a bushel while May soyoil fell 15 points to 34.84 cents per pound.

Crude oil futures settled below $50 a barrel for the 1st time in a week, sinking under the weight of swollen inventories that look set to grow further. Crude oil futures settled down $1.90 at $49.15 a barrel.
Malaysia’s palm oil stocks for end-March are expected to be lower at 1.5 mill from 1.56 mill tones in February, said Plantation Industries and Commodities Minister Datuk Peter Chin.

Market Outlook:
Sentiment remains negative amidst disappointing performance of overnight soyoil and crude oil. However, RM2000/MT level shall be sustainable on expectation of lower inventories.

For today, market is expected to open RM20-RM30 lower and trade in choppy mode. A breach below RM2066/MT psychological level will further dampen the market sentiment. Resistance seen at RM2205/MT (SMA 200) followed by RM2213/MT while support is pegged at RM2131/MT followed by RM2100/MT.

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