One day after ending the eight-day winning streak in which it gained nearly 60 points or 6.5 percent, the Malaysian stock market turned right back to the upside again on Wednesday. The Kuala Lumpur Composite Index again failed to close above resistance at 970 points, but investors are confident the market will get another crack at that level on Thursday.
The global forecast for the Asian markets is mixed with a touch of downside, thanks to a series of disappointing quarterly reports. Financials are expected to remain under pressure, although some of the bigger exporters and technology stocks may provide support. The European stock markets finished sharply higher and the U.S. markets ended mostly lower - and the Asian markets are predicted to see equal dichotomy.
The KLCI finished slightly higher on Wednesday, as gains among the financials, plantations and utility stocks was largely offset by weakness among the industrial issues.
For the day, the index was up 1.98 points or 0.20 percent to close at 968.58 after trading between 968.58 and 976.29. Volume was 1.1 billion shares worth 1.04 billion ringgit, with gainers outnumbering decliners 360 to 262.
Among the gainers, IOI Corp was up 1 percent and Axiata Group added 1.02 percent, while Time dotCom, Lion Diversified, Lion Industries, Maybank, Bumiputra-Commerce, Sime Darby and Tenaga Nasional also finished higher. Bucking the trend, Proton and KNM Group finished lower.
The lead from Wall Street is modest pessimism as stocks experienced considerable volatility over the course of the trading day on Wednesday, with the major averages unable to sustain any significant moves. The choppy trading came as investors continued to digest mixed earnings news.
Early on in the session, traders reacted negatively to quarterly results from Morgan Stanley (MS), which became one of the few major financial companies to report weaker than expected first quarter results. Morgan Stanley reported a much wider than expected first quarter loss of $0.57 per share and revealed that it has slashed its quarterly dividend by 80 percent to $0.05 a share.
Separately, Boeing (BA) reported first quarter net income of $610 million, down 50 percent from last year quarter's $1.21 billion. Revenues for the quarter rose 3 percent to $16.5 billion from last year's $15.99 billion. Looking forward, the aerospace giant reaffirmed its full year revenue guidance but lowered its earnings guidance due to lower earnings at its commercial airplanes business.
Meanwhile, fast food giant McDonald's (MCD) reported first quarter net income of $0.87 per share, compared to $0.81 per share in the same quarter of last year, while analysts expected the company to report earnings of $0.82 per share.
In other news, Treasury Secretary Timothy Geithner spoke to the Economics Club of Washington earlier in the day, hinting that policymakers might be forced to alter their recovery strategies as the global financial crisis drags on. He explained that the revised estimate from the International Monetary Fund for global growth could spark a change in policy. The IMF lowered its 2009 outlook, now predicating a contraction of 1.3 percent for the year compared to its previous estimate of 0.5 percent growth.
The major averages pulled back sharply going into the close, with the Dow and the S&P 500 falling firmly into negative territory. While the NASDAQ managed to hold onto a modest gain, closing up 2.27 points or 0.1 percent at 1,646.12, the Dow closed down 82.99 points or 1.0 percent at 7,886.57 and the S&P 500 closed down 6.53 points or 0.8 percent at 843.55.
In economic news, Malaysia's Department of Statistics said on Wednesday that the consumer price index rose 3.5 percent year-over-year in March, slower than the 3.7 percent increase in the previous month. Economists were looking an increase of 3.6 percent. Food and non-alcoholic beverages prices rose 8.8 percent annually in March, while clothing and footwear prices dropped 0.6 percent. Transport charges were down 2.1 percent.
Month-on-month, the CPI declined 0.2 percent in March, in contrast to a 0.2 percent rise seen in February. During the January to March period, consumer prices grew 3.7 percent compared to the same period of the previous year.
Also, Malaysia's total gross international reserves stood at US$87.7 billion as on April 15, slightly down from US$87.8 billion as on March 31, the Bank Negara Malaysia said Wednesday. The central bank said the reserve position is sufficient to finance 8.1 months of retained imports and four times the short-term external debt.
In the week ended April 15, foreign currency reserves amounted to US$81.7 billion, while the reserves with the IMF totaled US$0.4 billion. Gold reserves stood at US$0.4 billion, while the SDRs were US$0.2 billion. Other reserve assets amounted to US$5 billion.
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