Cautious on KLSE outlook

KLSE daily technical chart remains in bearish mode.

Market tone: weak

FKLI may cover gap

A positive ending for the day had provide a little cushion to the market downside momentum. Market may want to challenge the upside gap left over on 3rd Jul, 2008 at 1132-1137.5 in near term. For downside, support is pegged at 1104.5.

Market view: hold long with buy stop at 1100.

FCPO potential to test 3435

Market weakened further following a long black candle printed on the daily chart. Prices tested the support at 3516-3510 and potential to test the low at 3435 (low since 5th Jun, 2008) in near term. For upside, we look for the resistance at 3647.

Market view: hold short position with buy stop at 3647

FKLI may want to cover gap

FKLI hourly is moving steady in positive territory. Near term, may want to cover gap left over on 3rd July, 2008 at 1132-1137.5.

Recommendation: hold long with sell stop at 1100.

FCPO tested 3,550 levels

FCPO hourly continue to dip further and tested 3,550 levels. We look for the support at 3,516-3,510 followed by 3,500. While, resistance is at 3647

Recommendation: hold short with buy stop at 3647

Breaking News-DJ FOCUS:India Oilseeds Outlook Good Despite Weakening Rains

SINGAPORE (Dow Jones)--Patchy rains have slowed oilseeds planting in key southern and central Indian provinces in the past 8-10 days, but there's no likelihood yet of a drop in acreage or output this year, industry officials said Monday. Moreover, planting has been progressing well in western India which received ample rainfall, raising hopes of a net increase in acreage, they said.

Breaking News-Malaysia's PM says growth on track, reassure investors

Malaysia, July 7 (Reuters) - Malaysia's economy can hit the official 5 percent growth target this year as the fundamentals are strong, the prime minister said on Monday, vowing to put an end to political uncertainties that have roiled financial markets.

"I think 5 percent is achievable," Abdullah Ahmad Badawi told Reuters in an interview at his office in the administrative capital.

He said the political situation would soon stablise.

Malaysia has been rocked by sodomy allegations against opposition politician Anwar Ibrahim and a fresh assertion by a private detective -- which was abruptly retracted -- linking Deputy Prime Minister Najib Razak to a murder case.

"We will continue to take whatever measures necessary to ensure that the investment climate in Malaysia will continue to be favourable," he said.

"It's not a case of weakening fundamentals. The fundamentals of the economy are still strong."

Midday Update

KLSE-July 7 (Reuters) - Malaysian stocks may stabilise after steep falls in past months as rising inflation and political uncertainty are fully reflected in share prices, leaving investors to focus on the country's resilient economy.

The benchmark Kuala Lumpur Composite Index <.KLSE> closed at a 16-month low of 1,134.14 points on Friday, shedding 4.7 percent last week alone.

The index fell a further 0.6 percent in the morning session on Monday.

But the benchmark, which is down about 22 percent so far this year, is in better shape than other Asian stock markets, such as China <.SSEC>, India <.BSESN>, Vietnam <.VNI> and the Philippines <.PSI>, which have fallen between 30-50 percent this year.

While the index could fall further in the short term, the market is close to steadying, analysts say.

"After a series of de-ratings, we see little downside risk to the market, given how gloomy sentiment is currently," said Choong Wai Kee, the head of Malaysia research at Citigroup , in a report.

"We are reiterating our positive call on Malaysia on the premise that too much negative news is already in the price."

Malaysia's benchmark is now trading on a price to earnings multiple of around 11 times -- close to its lowest-ever valuation seen during the Asian financial crisis in 1997/98, and compared to a historical average of around 21 times earnings.

FKLI-July 7 (Bernama) -- The Kuala Lumpur Composite Index (KLCI) futures contracts were higher on continued bargain-hunting activities after previous losses, dealers said.

"However, the uptrend may not sustain as prices are expected to fall with the decline of share prices on the cash market," one of the dealers said.

FKLI July 2008 arose 6.0 points each to 1,116.0. Turnover stood at 4,113 lots.

FCPO-July 7 (Reuters) - Malaysian crude palm oil futures fell almost 2 percent on Monday as a build-up in supplies and weakening soybean oil prices weighed on the market.

By the midday break, the benchmark September contract on the Bursa Malaysia Derivatives Exchange fell 1.8 percent, or 65 ringgit, to 3,565 ringgit ($1,092) a tonne.

"It is a supply overhang and lower Chicago soybean oil which have triggered a selloff," said one dealer with a domestic brokerage. "I think now we have factored in the supply issue, the market should move up as demand is going to be good for the festival season."

Malaysia's end-June palm oil stocks are likely to touch 2.1 million tonnes from 1.9 million at end-May because of slowing demand in the last few months.

FCPO sell on rebound

FCPO hourly chart remains under pressure.

Recommendation: sell on rebound with a buy stop at 3647.

FKLI may want to rebound

FKLI hourly chart show little sign of rebound after the recent downturn. Thus, we look for the upside gap at 1137.5 to 1132 (gap left over on 3rd July, 2008). Downside support is pegged at 1104.5.

Recommendation: for intra-day, suggest to go for long with a sell stop at 1100.

Trader's Highlight

Commodities-July 7 (Reuters) - U.S. corn futures fell more than 3 percent in early Asian trading on Monday on expectations of better weather conditions and as oil prices fell back from record highs.

NYMEX crude for August delivery was trading at $144.24 a barrel, below an all-time high of $145.85 hit on Thursday, reducing appetite for biofuel feedstocks such as corn and soybean.

Front month July corn dropped 3.4 percent to $7.20-½ a bushel after a long holiday weekend. U.S. markets were closed on Friday for the Independence Day holiday.

Soybean futures also fell 1.3 percent to $16.36-½ a bushel.

Wheat also traded lower, taking a cue from weaker corn and soybean. July wheat fell 2.6 percent to $8.50 a bushel and September contract fell 2.7 percent.